This article by Andi Hoole, a conveyancer and notary public at C & A Friedlander Attorneys, explores five points that sellers have advised they wish they knew upfront, before they began the transfer process.
1. Locate the original title deed
The original title deed must be lodged at the Deeds Office by your conveyancer, or transferring attorney, when transferring the property to the purchaser.
A title deed is a document that proves ownership of immovable property. It contains the name, identity number and marital status of the owner/s, as well as the full legal property description. The title deed also states all conditions that are applicable to the property (such as homeowners’ Associations or building height restrictions) and will also refer to any servitudes that may be registered over the property.
An original title deed is signed by the Registrar of Deeds and has an embossed stamp on the last page, which proves that it is the original. This is important to note when selling your property because it enables you to differentiate between the original title deed and copies of same, merely by running your hand along the last page to feel whether the page is raised by the embossed stamp.
If the property is bonded, the original title deed will be in the possession of the relevant bond holder, which is the bank that granted the mortgage bond over the seller’s property. However, if the property is unbonded, the seller should be in possession of the original title deed and will need to locate it.
If the original title deed is lost, the conveyancer needs to apply to the Registrar of Deeds for a duplicate original. This is a long process. An advert must be placed in the Government Gazette and an issue of the newspaper printed in the area where the property is situated, calling on any interested parties to object to a new title deed being issued. The intended copy must be available for inspection at the Deeds Office for two weeks.
It is therefore important for the seller to ascertain whether they are in possession of the original title deed as early as possible to avoid any unnecessary delays. The cost of obtaining a duplicate original title deed is about R5 000 plus value-added tax per original title deed (April 2023).
2. Avoid penalty interest: notify the bond holder
If a mortgage bond is registered over the property, the seller must give the bond holder (the bank) 90 days’ written notice of their intention to cancel the bond, to avoid paying penalty interest.
We recommend that the seller, when signing a mandate with an estate agent, notifies the bond holder that the property is on the market.
If the seller fails to notify the bond holder timeously, they will be liable to pay penalty interest, which could be as much as three months’ interest on their bond. It is vital for sellers to keep in mind that once they have given notice to cancel their bond, they are still liable to make payment of their monthly instalments until date of registration of transfer.
It is important to note that, when the seller gives notice of their intention to cancel their bond, the bond holder will put a hold or freeze on their bond account so that they cannot withdraw any further funds from their access bond facility.
If a seller wants to make a payment, such as rates, from their access bond, they must withdraw the required amount before notice is given to the bond holder of their intention to cancel the bond.
3. The bond cancellation process
When you sell a bonded property, there are different types of attorneys who assist you with the selling process. There is the conveyancer or transferring attorney who you, as the seller, nominate in your offer to purchase and who assists you throughout the transfer process. There is also a bond cancellation attorney who is appointed by your bond holder to cancel your bond and who charges a separate bond cancellation fee for attending to this process.
Once the property is sold and the suspensive conditions (such as the purchaser securing a bond or the sale of the purchaser’s property) have been met, the conveyancer will write to the bond holder advising them that the sale is now valid and binding.
The bond holder will instruct a bond cancellation attorney and issue the conveyancer with cancellation figures, so they can ensure there are sufficient funds from the sale of the property to pay the outstanding balance on the bond and cancel the bond. The conveyancer also requires the cancellation figures to calculate an estimate of the amount from the proceeds of the sale of the property that the seller can expect to receive.
The bond holder then sends the original title deed to the bond cancellation attorneys. The conveyancer will provide an undertaking or bank guarantee to the bond cancellation attorneys for the bond cancellation amount, as well as their bond cancellation fees and costs. The bond cancellation attorneys will then proceed to draft a “consent to cancellation” document that is signed on behalf of the bond holder. The bond cancellation is lodged at the Deeds Office simultaneously with the transfer and is cancelled on the same day as the property transfers to the purchaser.
On registration of transfer, the seller’s bond is settled, and the seller will often receive a refund from the bond holder about two to three working days after registration of transfer.
The bond cancellation fees depend on how many bonds are registered over the property being sold. If there is one bond to be cancelled, it is about R5 500 plus VAT (April 2023). It is important for sellers to note that the bond cancellation fee is still payable even if the bond has been paid up in full.
4. Obtain a rates clearance certificate
The seller must pay an advance rates amount in cash prior to lodgement of the transfer at the Deeds Office.
For a conveyancer to transfer a property at the Deeds Office, they need to lodge a certificate from the council (municipality) confirming that all rates and services are paid up to date and in advance, to ensure that the purchaser does not inherit the seller’s debt.
Sellers often are not aware that to obtain a rates clearance certificate from council, the seller must pay their current rates and services up to date and about 60 days of future rates and services, known as “advanced collections”.
Your conveyancer will request the advance figures from the council and once received, send the figures to the seller, who must make payment of this amount to the conveyancer, who, in turn, pays the council. Most conveyancers can assist the seller by arranging for bridging finance if the seller is unable to pay the advanced collections upfront.
The council will then issue a rates clearance certificate reflecting the seller’s and the purchaser’s names and the property description. The certificate has an expiration date of 60 days from date of issue, which means that if the transfer is delayed for any reason, the conveyancer will have to apply for updated figures, and the seller will have to make a further payment.
On registration, the conveyancer will notify the council that the property has been registered. However, the council usually waits for confirmation from the Deeds Office before finalising the seller’s account. Once the seller’s account is finalised, any refund due to the seller, in respect of the advanced collections not used, is paid to the conveyancer, who, in turn, makes payment to the seller. The purchaser will then receive an account directly from the council for the rates due from date of registration. This update on the council’s system can take four to six weeks from date of registration.
5. Municipal plans/building plans
If the building plans are found to be outdated and not “as built” plans, prior to registration of transfer, the onus is on the seller to have the plans redrafted and approved by the local authority at their cost.
Increasingly, purchasers want to insert a suspensive condition in their offer to purchase that makes the offer subject to building plans being provided by the seller. It is also sometimes a condition of the purchaser’s bond that the building plans are submitted to the bond holder before the bond attorney can lodge their documents at the Deeds Office. We recommend that, when possible, the seller provides a copy of the building plans to the purchaser at mandate stage to prevent delays.
It is important for sellers to note that even if a purchaser does not stipulate building plans as a condition of the sale but requests a copy of the plans during the transfer process, the seller is obliged to provide “up to date, as built, approved plans” to the purchaser.
If the purchaser requests a copy of the plans after transfer taking place and the plans do not match the property, this could be seen as a latent defect, and the seller may be found liable for the costs of rectifying the defect. If the purchaser can prove that the seller was aware the plans were outdated, regardless of whether they were in possession of a copy of the plans, and that they intentionally concealed this fact from the purchaser, the seller will have to update the plans at their expense.
Disclaimer: This article provides general information and should not be used or relied on as legal or other professional advice. Always contact your legal adviser for specific and detailed advice.
Sold my home in 2005 was paid cash, now 2022 the title deed still in
My name… Who has the right to ownership
I sold my house Oct 2022,the buyers payed occupational rent for 3 months ,but now for 8 months they refused to pay and refuse to sign the transfer documents,what to do ?
Contact an attorney who specialises in property law ASAP and initiate eviction proceedings. The longer you wait, the harder it will be to get them out.