The cost for cancellation and early termination is for the account of the seller and therefore it is important for the seller to understand exactly what costs are due and what is required to reduce their risk.

In terms of the National Credit Act, financial institutions are entitled to charge an early termination penalty if the seller cancels their bond before the agreed term of the bond. The charge or penalty depends on the specific terms of the credit agreement – but it is usually 90 days.

Remember – giving notice to the bank of your intention to cancel and the actual cancellation of the bond are two different things. Giving notice only starts the process of calculating the penalty interest but the bond must still be cancelled physically in the Deeds Office by the bank’s appointed conveyancing attorney. The bond cancellation is registered at the same time as the transfer.

If registration takes place after the 90 day notice period, the penalty will fall away. If registration of the transfer of the property falls within the 90 day time period, the penalty will be reduced pro-rata to the time left on the notice period.

WHAT STEPS DO YOU NEED TO TAKE TO CANCEL YOUR BOND?

1. As soon as you put your property up for sale, give written notice to your bank of your intention to sell and to cancel your bond. The notice can be done telephonically but written confirmation (by e-mail) is advisable in case the date of the notice is disputed.
2. Confirm with your bank what their exact process is regarding notice i.e. do you give a once-off notice and after the 90 days no penalties are charged or do you need to give notice every 3 months if the property hasn’t sold yet?
3. The bank will instruct an attorney to cancel the bond. If the bond is on a R0,00 balance and not linked to a transaction, the attorneys will contact you and proceed with the cancellation. If there is still a balance outstanding and the cancellation is linked to the sale of your property, the attorneys will be in contact with your transferring attorneys for a guarantee to settle the balance.
4. Remember that once you give notice to the bank, most banks put a hold on your access facility (if applicable). So, it is advisable to withdraw any access funds that you may need prior to cancellation of the bond before same are frozen.
5. Bond cancellation attorneys’ fees need to be paid and are approximately R5,000 (depending on how many bonds you have registered). These costs can usually be paid from the proceeds of the sale by your transferring attorney.

If you need help cancelling your bond, contact us and we will notify the relevant bank accordingly – gillian@erasmuslaw.co.za or 0604816891.

WHAT IS A CONVEYANCER?

Immovable property (houses, flats, vacant land etc) can only be transferred by a conveyancer – a practising attorney who specialises in the preparation of deeds and documents. In a normal registration and transfer process, the transferring conveyancer oversees more than 50 activities involving up to 12 parties. The conveyancer deals with all the parties involved and assumes responsibility for the collection and payment of all amounts due (to the bank(s), agent(s), compliance bodies, local authority, SARS, body corporate, and, ultimately, the seller). The right conveyancer is the difference between a stress-free transfer and tearing your hair out over complex administration.

WHO CHOOSES AND WHO PAYS?

Typically, the seller has the right to choose the conveyancer and the purchaser pays the transfer fees. Transfer fees are regulated by a Law Society tariff to ensure that the purchaser is not unfairly prejudiced by the seller’s choice.

HOW DO I CHOOSE (AND DOES IT MATTER)?

The seller chooses the conveyancer when signing the offer to purchase. Your estate agent is allowed to make recommendations, but your choice should not be influenced by other relationships or benefits which may not necessarily always be in your best interests. If you don’t know a conveyancer, ask friends or colleagues who have recently sold a property to suggest a conveyancer who provided exceptional service and support throughout the entire process, who continually addressed any problems that arose, professionally and competently, and who kept within timelines, all while keeping the parties fully informed of the progress of the matter.

The choice of a conveyancer is critical, particularly to avoid delays and ensure a personalised service that is in the interests of all parties. Always choose a reputable conveyancer who delivers on their promises and makes your transfer their priority.

SO, WHO ARE WE?

Gillian Erasmus Attorneys Inc is a female-owned and run conveyancing firm. We always provide personal and honest advice, and we guarantee that the transfer of your property is in safe hands. Our director, Gillian Erasmus, will be your personal contact throughout the sale and transfer of your property and will ensure that what you agree to with the purchaser becomes a reality.

For more information on how we can help you, please get in touch with us. Gillian Erasmus – gillian@erasmuslaw.co.za or 0604816891.

While admirable and certainly an option, you do need a property professional to guide you (and usually the buyer) through the process. Ultimately, a conveyancer must transfer the property in the deeds office. As a qualified conveyancer, Gillian is perfectly placed to advise you on the legal process and the very important and legally binding offer to purchase.

Without an estate agent, the conveyancer must play the role of careful mediator and property professional, acting for the seller but also advising the buyer. This is a role that Gillian has played many times – ensuring that both parties have the result they desire from the sale and ensuring frequent and current communication and contact.

Yes – ANY conveyancer can transfer the property and can be appointed after the offer to purchase is signed. But having your trusted conveyancer involved from the drafting of the contract will ensure legally sound advice and a reliable contractual understanding between the parties.

Regarding fees, the seller has the right to choose the conveyancer and the purchaser pays the transfer fees. Transfer fees are regulated by a Law Society tariff to ensure that the purchaser is not unfairly prejudiced by the seller’s choice.

SO, WHO ARE WE?

Gillian Erasmus Attorneys Inc is a female-owned and run conveyancing firm. We always provide personal and honest advice, and we guarantee that the transfer of your property is in safe hands. Our director, Gillian Erasmus, will be your personal contact throughout the sale and transfer of your property and will ensure that what you agree to with the purchaser becomes a reality.

WHAT IS A GUARANTEE?

The guarantee is a document issued by a registered South African bank that guarantees the payment of funds upon the happening of certain events (i.e., the transferring attorney informing the bank that registration of the transfer of the property from the seller to the purchaser in the deeds registryhas taken place).
Guarantees are signed by a representative of the issuing bank, or an authorised agent who signs the guarantee under a power of attorney.
On transfer, the conveyancer will notify the issuer of that guarantee of the registration. The guarantee is then payable, and funds are paid in terms of that guarantee into the nominated trust account.

THE SOURCE OF THE GUARANTEE?

If the purchaser finances the purchase through a mortgage bond, the mortgagee bank and its attorneys will facilitate the issuing of the guarantee.
If the purchase price is to be secured in cash, there are two ways to issue the guarantee.

1. The first method would be for the purchaser to pay the funds into the conveyancer’s trust account and allow the attorney to issue the necessary guarantee. Most attorneys do not charge for the issue of this guarantee. The purchaser will also receive interest on the funds in the conveyancer’s account (provided they give the necessary authority to the conveyancer).
2. The second method would be for the purchaser to leave the funds in their bank account and request their bankers to issue the required guarantee. The conveyancers provide the guarantee requirements (and should adequately explain these to the purchaser). The disadvantage in this method is that banks generally charge a fee for the issue of a guarantee, which fee varies from bank to bank. There are also administrative challenges that may be difficult for a layperson to understand and overcome.

A MATTER OF TRUST?

Purchasers often enquire whether they can simply pay the purchase price on registration, without the issue of a guarantee. The answer to this question is NO!
The conveyancer has a duty to the seller to secure the purchase price so that on registration the payment of that purchase price is guaranteed. Furthermore, the seller’s bank usually requires a guarantee for the particular amount owing on the seller’s bond prior to allowing transfer. This is not possible without a valid guarantee.
This is not a matter of trust but rather one of practicality and contractual compliance.

For assistance with your property purchase or sale, get in touch.

THE TRANSFER DATE

The transfer date is usually specified as a date in the offer to purchase. Sometimes this date is simply ‘as soon as possible’, but for peace of mind a particular date no less than 8 weeks from the date of acceptance of the offer is suggested. The estate agent is well-placed to advise on a suitable transfer date.

Where a transfer date is specified, this is often followed by the phrase ‘…or as soon as reasonably possible thereafter’. The transfer process typically involves at least three sets (or more) of attorneys, two banks (one to cancel the seller’s bond and one to register the purchaser’s new bond), a municipality, SARS, and in some cases homeowners’ associations and body corporates. Where transfers should occur simultaneously or are financially dependent on one another, these parties are compounded by the number of linked transfers.

Because of the various different processes and role players, and the necessity of parties paying the prescribed transfer fees, costs, and levies on time, there is a chance that the transfer date agreed to by the parties has to be pushed back. It also happens that transfer is scheduled for the 1st of the month, which falls on a Saturday and Sunday. Transfer will only occur on the first working day following that, even if lodged timeously.

Once deeds are lodged at the deeds office, the examiners subject the deeds to rigorous scrutiny to ensure that the transfer of ownership and conditions of title are brought forward precisely. If the examiners raise a concern, the matter is either brought to prep with an examination note, or the deeds are rejected, requiring the conveyancer to correct the deeds and re-lodge.

DOES THIS MEAN THE TRANSFER CAN TAKE HOWEVER LONG IT TAKES?

No. Your conveyancer should try to register the transfer on the agreed date to the best of their abilities. This involves requesting documentation and information early, applying with the necessary stakeholders at the right time, keeping both parties informed of the costs involved in the transfer and the dates for payment, and constant communication with seller, purchaser, and agent(s) to ensure that all parties are fully aware of the progress of the matter and any potential delays.

IS THERE ANYTHING THAT CAN BE DONE?

Most offers to purchase provide for occupational rental to be paid, which is an amount paid by whichever party is in occupation when the transfer registers (if they are not the owner). An example is if the seller remains in the property after registration or where the buyer moves in before the transfer is registered in the deeds office. The payment of occupational rental allows a purchaser to move in on a specified date while allowing the seller compensation for moving out before transfer.
The choice of conveyancer is critical, particularly to avoid delays and ensure a personalised service that is in the interests of all parties. Always choose a reputable conveyancer who delivers on their promises and makes your transfer their priority.

Gillian Erasmus Attorneys Inc is a female-owned and run conveyancing firm. We always provide personal and honest advice, and we guarantee that the transfer of your property is in safe hands. Our director, Gillian Erasmus, is your personal contact throughout the transfer of the property and will ensure that what you agree to becomes a reality.

BUT WHY?

Before 1937, it was not standard practice that conditions be carried forward from deed to deed. In the Deeds Registries in the former Cape Province, the so-called pivot deed system existed, which is unique to the Cape Town deeds registry.

In terms of this system, no conditions were carried forward in a title deed. The title deed conditions would simply state:

“Subject to the conditions as contained in Deed of Transfer No … [with reference to the prior title deed]”.

When searching the above pivot deed, these deeds each refer to earlier title deeds. Only since 1937 have title deed conditions been carried forward in each new title deed. Thus, to determine all the possible conditions against and in favour of a property, a skilled conveyancer must conduct proper research in the Deeds Office archives and all previous title deeds must be checked, from the day when the first Government Grant or Crown Grant was issued (which may be as far back as the 1800s) to 1937.

WHAT WILL IT COST?

The conveyancer will generally charge on an hourly rate, depending on the length or complexity of the search. Request a quote before instructing the conveyancer to proceed because the costs vary.

WHAT IF THERE ARE RESTRICTIVE CONDITIONS?

Should there be a restrictive title deed condition preventing the approval of your building plan, you would have to submit yet another application to the municipality for the removal of the condition. This application requires advertising, as well as publishing the approval in the Government Gazette. Once the municipality approves the removal, the conveyancer will also have to apply to remove the condition from the title deed at the Deeds Office.

For advice regarding a conveyancer’s certificate or the removal of restrictive title conditions, contact our offices for professional advice.

gillian@erasmuslaw.co.za  |  060 481 6891

1. Agent’s commission:

The commission amount as agreed and accepted by the Seller in the Offer to Purchase. This amount is usually represented as a percentage of the purchase price plus VAT.

2. Cancellation of the existing mortgage bond and penalty interest:

The property cannot be transferred unless all mortgage bonds registered over the property are formally cancelled at the Deeds Office. In terms of the National Credit Act, the Seller is obliged to give the bank 90 (ninety) days’ notice of its intention to cancel the mortgage bond. Should the bond be cancelled before the 90 days’ notice period has expired, the Seller will be liable for penalty interest for the remaining days of such period.

3. Bond cancellation costs:

The relevant financial institution/bank will instruct an attorney on their panel to attend to the cancellation of the bond. The costs are approximately R5,000.00 and escalate based on the number of bonds registered over the property which are to be cancelled. The transferring attorneys will liaise directly with the bond cancellation attorneys and pay their fees from the proceeds of the transaction.

4. Rates clearance costs:

A rates clearance certificate is always required where a property has been sold. The certificate confirms that all monies due, owing, and payable to the local authority have been paid. Typically, the local authority insists on the payment of an estimation of 60 days advance projection in respect of rates, electricity, water, and refuse. On registration of transfer, the local authority is advised and will adjust the account accordingly. Any refund due in respect of the advance payments made will be refunded to the Seller by the local authority after registration of transfer.

5. Levy clearance costs:

Where a sectional title unit is sold, a levy clearance certificate is required which confirms that all levies and other imposts have been paid up to the end of a certain month in which registration is to take place. Although the purchaser pays for the costs of the certificate, the managing agent or body corporate require an advance payment of levies or utility charges. The transferring attorneys or body corporate will attend to the pro-rata adjustments of payments made upon registration of transfer.

6. Homeowners association clearance costs:

If there is a restrictive condition in the title deed in favour of a homeowner’s association, their clearance certificate is required. This certificate confirms that all monies due to the association have been paid in full to the end of a certain month in which of contributions. Although the purchaser pays for the costs of the certificate, the monies due to the association are to be paid by the seller. The transferring attorneys/HOA will attend to the pro-rata adjustments of payments made upon registration of transfer.

7. Compliance certificates:

Where applicable, an electrical compliance certificate, plumbing certificate, gas installation certificate of conformity, and electric fence system certificate of compliance will be required. The costs will depend on the contractor. Although contractors allow these costs to be settled on registration out of the proceeds, it is often cheaper to pay them directly.

8. Lost title deed:

In the unlikely event that the Title Deed for the property has been lost, the lost copy will need to be advertised and application made to the Deeds Registry for the issue of a certified copy thereof. The cost of the application is approximately R4,500.00 and can cause several weeks delay.

Planning for these costs (most of which are required before the purchase price can be paid to the seller) will prevent unforeseen distress and surprise costs during the transfer process. Always speak to your trusted Conveyancer before accepting an offer to properly plan for these costs.

For first-time home buyers, transfer costs can come as a bit of an unexpected (and un-budgeted) surprise. After all the effort to save for a deposit, and meticulously calculating your future property-related costs down to the last cent, the last thing you need is extra expenses required on demand to ensure the transfer goes through. Read below to make sure you’re truly prepared to sign that offer-to-purchase.

What Are Transfer Costs?

Transfer costs are not the same as transfer duty on a property. Rather, transfer costs comprise of a number of expenses, including transfer duty, that needs to be paid to the transferring attorneys before transfer (up to six weeks before). They include the following:

1. Transfer Duty

Transfer Duty is a tax (payable to SARS) levied on the value of a property above R1 000 000, to transfer the property to the buyer. This accounts for quite a large proportion of the costs involved in purchasing a home. Click here to calculate transfer duty.

2. Transferring Conveyancer’s Fee:

This is a fee payable to the Transferring Attorneys to transfer the property in your name. The amount varies depending on the property price and the law firm, but the fee is based on the Law Society’s recommended tariffs. Your estate agent or chosen attorney can provide you with a pro forma quotation before you put in an offer on a property. For a R1 million property, expect to pay approximately R22,000 and for a R10 million property, approximately R80,000.

3. Transfer Postage and Petties

These are disbursements to cover small expenses like printing, e-mails, drafting, and posting documents to other parties, including you. The amount, once again, varies from law firm to law firm, but it’s usually fixed. Look at spending somewhere in the region of R1 000.

4. Other Fees

These include rates clearance certificate fees to the municipality and electronic rates request fees (for the facilitation of the certificate). These fees usually amount to around R2 000.

5. Deeds Office Registry Fee

This is a government disbursement payable to the Deeds Office for the Title Deed and legal transfer and registration of your new home into your name. The amount is fixed according to the purchase amount.

What Are Bond Costs?

Yes, there are more costs. Bond costs are payable to the bond registration attorneys (chosen by the bank or financial institution) before the date of registration. It amounts to less than the accumulative transfer costs and includes:

1. Bond Registration Conveyancing Fees

These are for the service the bond registration attorneys provide to get your bond registered. The fee is based on tariffs recommended by the Law Society. The amount will vary according to your home loan amount and may differ from one law firm to another.

2. Bond Registration Post, Petties, and Other Fees

The Bond Attorneys also charge disbursements to cover small things like posting documents. Similar to the transfer petties, expect to pay around R1 000.

3. Bond Registration Deeds Office Registry Fee

This is a fixed fee charged by the Deeds Office for the legal registration of your mortgage bond; the amount is determined by the amount of your home loan.

However, there may be other costs involved, such as levy clearance and insurance certificate fees (for sectional titles) and homeowner’s consent fees (where such home owners’ associations exist).

Ask a conveyancer you trust to provide you with a pro forma statement so you can accurately plan for the expenses involved.

What are commercial contacts?

Your ‘commercial contracts’ are the legally binding agreements between you and your customers, suppliers, or business partners. These include everything from your terms of business with customers to your lease agreement (with your landlord and your sub-tenants) and employee agreements. Even your basic indemnities and returns policies form part of your commercial contractual agreements. Reviewing these contracts is vital for business growth and success.

Why it’s important to review your commercial contracts

1. Maintain legal compliance
Much may have changed since your business contracts were originally signed – including the law. Reviewing and updating your commercial contracts regularly ensures that all terms are still legally enforceable. Failing to comply with certain legislation means you risk damage to your reputation, fines, or even business closure.

2. Adapt to changing business needs
As we have seen over the past two months, our whole world can change in a matter of moments. In today’s technology-driven economy, businesses evolve rapidly to meet customers’ growing expectations. You may have recently decided to take your entire enterprise online.

Adapting your existing contracts to meet new demands and requirements will help ease some of the anxiety around how to deal with changes.

3. Streamline for better customer engagement
If your customers don’t understand what they’re signing, they may take their business elsewhere. Simplifying your contracts to make them clearer and more engaging and excluding unnecessary jargon while retaining the legal details that protect you and your customers’ interests will build customer trust. If your customers are primarily consumers, ensuring your contracts comply with Consumer Protection and Protection of Information legislation is essential.

A good place to start is by updating the infamous ‘small print’ – your customer ‘Terms and Conditions’. Turning your ‘Ts and Cs’ into a living document that reflects your current business and customers’ needs ensures their relevance to your business and your customer.

4. Ensure your team understand their legal responsibilities
Change is a constant part of life and business – and this includes your employees. Your team may have changed considerably since the business’ commercial contracts were first signed or you may even be new to the company yourself. Make sure your current team understands their legal rights and obligations.

5. Be prepared for change
Understand the termination clauses in your contracts. You can use these clauses if you’re no longer happy with the agreement or service you’re receiving. Therefore, it’s important to familiarise yourself with your existing contracts so you can make changes that benefit your business.

You won’t be able to update all of your commercial contracts immediately; some may include restrictions that prevent you from updating the contents until a specific date. However, knowing when and how you are entitled to amend or cancel allows for planning and strategising.

How to go about it

1. Get professional help
You probably know your business inside out, but you may not have legal expertise. Hiring a legal professional to review your commercial contracts takes the stress out of this daunting process. A commercial lawyer will spot any legal issues lurking within your existing contracts that you might miss.

2. Pick someone you trust
Pick a lawyer that understands your industry or business focus. Explaining clearly how your business works and what challenges you face will allow your lawyer to understand your specific commercial needs from the start, saving you time and money.

3. Pick a lawyer who shares your vision
Importantly, choose a lawyer who understands you, your values, and your goals.

But, before you go ahead and sign up your new tenant, make sure you have the right lease in place to avoid any problems that might arise. Although leases are nuanced and complex and there is no one-size-fits-all agreement, any lease can be improved upon by avoiding these four common pitfalls.

Agreeing to fix or maintain too much

Simply put, a lease is a contract. Whatever you agree to do in writing, you are responsible for doing. While the Rental Housing Act stipulates certain provisions which are deemed to be part of the lease, agreeing to fix or repair too many things will make you liable to the tenant for the duration of the lease.

Asking the tenant to do too much

Most residential leases are subject to the Consumer Protection Act, which applies both to the wording of the lease and the actual obligations. Furthermore, tenants have recourse to the Rental Housing Tribunal to make determinations on unfair practices in lease agreements. Unduly onerous clauses or one-sided clauses that are considered unfair are unenforceable.

Not adhering to the law regarding deposits

The Rental Housing Act unambiguously states that a deposit paid by the tenant must be invested by the landlord in an interest-bearing account with a financial institution and the landlord must pay the tenant interest at the rate applicable to such account (which may not be less than the rate applicable to a savings account with a financial institution). Subject to the deduction of the reasonable cost of repairing damage and replacing keys, the landlord must repay the deposit with interest to the tenant, within 14 or 21 days of the end of the lease (depending on the situation).

Not reducing rental extensions to writing

The Consumer Protection Act regulates the extension of fixed-term contracts. A landlord must give written notice to a tenant of the pending expiry of a fixed-term agreement not more than 80 business days and not less than 40 business days before the expiry date thereof. The notice must include any material changes to apply in the event of renewal of the lease agreement, as well as any other cancellation or renewal options available to the tenant. If notice is not given, the new month-by-month agreement will be on the old lease agreement terms.

The bottom line

Tenants want to rent in places where they feel that the landlord is fair and reasonable, and where the lease agreement provides both parties with clarity on their rights and obligations.

Ensuring that your lease agreement complies with the relevant legislation and is enforceable in the event of a dispute is essential.