WHAT IS CONVEYANCING?:
Conveyancing entails the legal process of changing ownership of property by way of a registration process in a Deeds Office. It also deals with the registration of other rights in property such as mortgage bonds.
A conveyancer is a specialist attorney in the field of property and related matters. Conveyancers ensure that the agreement between the Seller and the Purchaser is implemented. We also ensure the implementation of loan agreements between a Purchaser (“mortgagor”) and Financial Institution/Bank (“mortgagee”).
THE PROCESS:
SALE / PURCHASE OF PROPERTY:
The process of registering a property in the purchaser’s name, involves a series of successive stages. It is impossible to state a time period within which a transfer takes place, but in the absence of an agreed date in the Agreement, a transfer can be registered within 6 to 8 weeks, provided all parties involved in the transaction perform their obligations timeously.
THE AGREEMENT:
Property is sold by way of a written Agreement signed by the Seller and Purchaser. It is prudent to have the Agreement approved by your attorney before you the agreement. Our firm assists in the drafting of this agreement. We also peruse and advise on draft agreements obtained from agents and provide legal advice to ensure that the Agreement reflects the intention of parties. A proper Agreement reflects the property purchased, purchase price, method of payment, estate agent’s fees (if any), special conditions, occupation date, registration date or period and breach clauses.
After signature of the agreement, a conveyancer is instructed to attend to the registration of the transfer and ensure compliance with the ever increasing demands on the property owner. It is the Seller’s right to appoint a transferring conveyancer, although the purchaser may do so if the Seller agrees thereto. Usually the purchaser pays the transfer costs.
CONDITIONS OF SALE:
Once the parties have signed the Agreement, it is forwarded to the nominated Conveyancer. We guide and assist the parties to fulfill the conditions of the Agreement. This includes calling for the deposit due by the Purchaser in terms of the Agreement, requesting guarantees where it is a cash sale, and if the purchase of the property is financed by a financial institution, getting guarantees for payment from the bank’s attorneys.
Our firm will, if required, introduce the Purchaser to bond originators who will in turn assist such Purchaser to secure the most competitive financial package for the repayment of the mortgage bond. Although the financial institution nominate their Conveyancer, some banks now allow clients to nominate conveyancers from a selection of attorneys on the relevant bank’s panel.
CANCELLATION OF BOND(S):
If the Seller’s property is bonded to a financial institution, the financial institution must consent to the cancellation of the mortgage bond registered over the property. The bond account number is required from the Seller, to enable the Conveyancer to instruct the bank to proceed with the cancellation. The financial institution retains the original title deed and mortgage bond as security until the bond is cancelled which normally occurs when the property is sold.
It is prudent to notify the bond holder as soon as the property has been sold as most loan agreements contain contractual notice periods of usually 90 days. Just beware that cancellation notice to the banks usually freezes the access facility on the loan making access to cash until registration of transfer difficult.
RATES CLEARANCE:
A property cannot be transferred from the Seller to the Purchaser without the local authority consenting to such registration. This is done by obtaining a rates clearance certificate from the local authority. Usually, such consent will only be given if the annual rates have been paid in full for the financial year, which ends on 30 June.
It is also customary for the local authority to collect, in advance, deposits for services, which deposits are refunded to the Seller after the records of the local authority have been adjusted to reflect the details of the Purchaser as the new registered owner of the property.
SIGNING OF TRANSFER DOCUMENTS:
Transfer documents will be drafted by the Conveyancer and the parties contacted to sign same in black ink.
TRANSFER DUTY:
The consent of the South African Revenue Services is required to proceed with the registration of a property. Certificates stating that the relevant taxes have been paid or that the transaction is exempt from any taxes are issued by SARS.
SARS may call upon the Conveyancer to pay over any outstanding taxes owing by any of the parties. It is prudent to advise the Conveyancer should you not be a registered tax payer as all parties are required to be on to SARS data base when a property is transferred.
Transfer Duties
New rates 1 March 2020 to 28 February 2021:
| Value of the property (R) | Rate |
| 1 – 1000 000 | 0% |
| 1 000 001 – 1 375 000 | 3% of the value above R1 000 000 |
| 1 375 001 – 1 925 000 | R11 250 + 6% of the value above R 1 375 000 |
| 1 925 001 – 2 475 000 | R44 250 + 8% of the value above R 1 925 000 |
| 2 475 001 – 11 000 000 | R88 250 +11% of the value above R2 475 000 |
| 11 000 001 and above | R1 026 000 + 13% of the value exceeding R11 000 000 |
PREPARATION FOR DEEDS OFFICE:
Once all the role-players have fulfilled their tasks, the documents, including the new title deed, can be prepared by the Conveyancer.
During the conveyancing process, the transferring Conveyancer liaises with the bond cancellation attorneys and the bond registration attorneys and coordinates the simultaneous lodgement in the Deeds Office. His role is akin to that of a conductor of an orchestra. Once lodged, the documents are examined by various levels of examiners and this process takes approximately 14 working days, depending on efficiency of the relevant Deeds Office.
After examination of the documents, the documents come up on “preparation” which means the conveyancer can finalise the finances and register the transfer.
After registration of transfer the documents are retained by the Deeds Office for the final stage of the process. The new information of ownership and price is captured on microfilm for public information purposes. Once this process has been competed, the documents are delivered to the Conveyancer who in turn delivers it to the Purchaser or the Purchaser’s Bank. This final stage currently takes approximately four months.
CAPITAL GAINS TAX:
Taxpayers are taxed on the profit they make when they dispose of an asset of a capital nature, provided the proceeds are more than R2 million rand. CGT will not be payable on the profit of less than R2 million rand on the sale of a primary residence (which must be less than two hectares). CGT is also payable on profits generated on sale of properties registered in the name of legal entities.
It is the difference between the base cost of the asset and the sale price. Such profit is added to the seller’s income tax bill and the amount payable will depend on the seller’s tax rate. For amounts payable in respect of Capital Gains Tax it is important to liaise with your tax consultant. As a very general guide, the tax will be an effective rate of 10% of profit for natural persons.
The base cost referred to above includes:
· expenditure incurred in acquiring the asset,
· any improvements of a capital nature made to the asset
· any other costs incurred by the sale of the asset. (eg: estate agent’s commission)
The above must be proved. It is therefore important to keep records related to your capital asset.
Expenses relating to maintenance, insurance, inflation, devaluation, and finance charges are excluded in calculating the base cost.
Email: conveyancing@plougmann.co.za | Tel: 082 456 1758
