Property Law Services

Buying or Selling property is the biggest financial commitment most of us will ever undertake. It is thus very important that the Estate Agent and Conveyancers are chosen carefully. The Estate Agent will explain the terms of the sale agreement to the parties – who must ensure that they ask questions and understand all the terms before signing the agreement. Once the agreement of sale is signed, it is a binding contract between the Seller and Purchaser.

What are Suspensive Conditions?

The Sale Agreement must contain “Suspensive Conditions”. These are conditions which must be fulfilled before the transfer process can begin. The most common suspensive condition is that the Purchaser must obtain a bond. A bond is a loan of money to the Purchaser by a financial institution like a bank enabling him to pay the purchase price of the property, on security of the property purchased. Another common suspensive condition is that the agreement is subject to the sale of the Purchaser property. This happens where the Purchaser is selling his property and needs the funds from the purchase price of that property to pay for the new property. The Seller, in this case, must realise that the transfer of the Purchaser’s property will have to be registered before or simultaneously with the transfer of the Seller’s property. The conveyancers will then correspond closely with and usually obtain an undertaking from the conveyancers who are attending to the transfer of the Purchaser’s property to pay over the proceeds of that sale on registration.

If the Seller still owes money to the bank in respect of the bond over the property, because money was borrowed to buy the property, then that bond will have to be cancelled at the same time the property is transferred to the Purchaser. The Conveyancer must obtain the original title deed to the property from the Seller’s bank, who will be holding the title deed as security. The Seller’s bank will also let the Conveyancer have the “cancellation figures”, i.e. the exact amount still owing by the Seller under his bond. When the property is registered in the name of the Purchaser and the Seller’s bond is cancelled, the seller’s bank will be paid the outstanding amount and the balance of the purchase price will be paid to the Seller. The cost of cancelling the bond is payable by the Seller and is deducted from the purchase price before the Seller receives the balance. The Seller’s bank decides which Conveyancer will attend to the cancellation of the bond. If this is not the same Conveyancer who is attending to the transfer of the property, then the Transferring Conveyancer must correspond closely with the Cancellation Conveyancer to ensure that the transfer documents and the cancellations documents are lodged in the Deeds Office together.

If the Purchaser is obtaining a bond to pay the purchase price, this bond will also have to be registered simultaneously with the registration of the transfer and the cancellation of the Seller’s bond. The bank which is granting the bond will appoint the Conveyancer who is to attend to the registration of the bond. If this is not the same Conveyancer who is attending to the registration of the property, then the transfer Conveyancer must cooperate closely with the bond Conveyancer to ensure that the all the documents are drawn up and lodged at the Deeds Office together. If the Bank appoints the same Conveyancer who is attending to the transfer, then the process is made much simpler and quicker – because the bond and transfer documents will be prepared and signed at one office. Johan Jacobs & Malcolm Moodie Attorneys register bonds for all the major banks. The Conveyancer attending to the transfer will obtain guarantees from the Purchaser’s Bond attorneys to ensure that the money being lent to the Purchaser is available on the date of registration of the bond. The various banks have different conditions which must be met before the bond can be registered. These conditions include the signing of various documents by the Purchaser; obtaining insurance on the building that is erected on the property; obtaining and ceding a life assurance policy; the signing of surety; etc. The Bank will not allow the bond to be registered until all the conditions are met and it is thus in the interest of the Purchaser to take all steps necessary to comply with the Bank’s requirements.

Documents to be Signed:

A Power of Attorney to Mortgage
This document gives the attorneys the Authority to register a mortgage bond on behalf of the clients in favour of a Bank.

Authority for payment
This document instructs the Bank on registration to make payment of the borrowed funds.

Letter of grant – this is the terms and conditions of the Bank where upon signature the clients acknowledges its obligations to the Bank.

Draft Mortgage Bond
This is the document that records the client’s financial obligations to the Bank in the deeds office.

Affidavits
This confirms the clients personal particulars regarding marriage and insolvency.

Suretyship
This is required when a client needs a guarantor for the loan.

Cession of Life Cover
This should life cover be required by the Bank – the client cedes an existing policy or takes out a new policy.

After signature and payment of costs have been received, the Bond Attorneys prepare the necessary guarantees to secure the purchase price of the property. These guarantees are then forwarded to the transferring Attorneys. The Power of Attorney, original Title Deed and draft Mortgage bond are forwarded to the Deeds registration Office where the documents are systematically checked and registered. On registration the transferring attorney presents the guarantees to the Bank and receives payment of the funds. The New mortgagor’s loan is now operational and monthly payments will be due from the nominated day of the month following registration.

To enable the Conveyancer to prepare the transfer documents, he will require the Purchaser’s & Seller’s details together with certified copies of their Identity documents, marriage certificates, ANC’s, divorce orders, FICA documentation etc. After receiving these documents & the original Title Deed, the Conveyancer will prepare the transfer documents & their proforma account. The Parties will then be called upon to sign the documents and the Purchaser will be called upon to pay the Conveyancer’s costs. These costs will include:

• The Conveyancer’s fees: these fees are charged in accordance with a tariff issued by the law society.
• Transfer Duty: this is a tax payable to the state on all transfers of immovable property sold for more than R900 000.00 and is calculated as a percentage of the purchase price. No transfer can be registered until the Deeds Office has proof that the transfer duty has been paid.
• Rates and Taxes: the purchasers will be liable for rates and taxes from the date of registration of the property in their name. Approximately 4 months’ payment in advance of the rates and taxes will be required by the Seller to enable the Conveyancer to obtain a rates clearance certificate from the rates department. No transfer can be registered until the Deeds Office has proof that the rates have been paid. If the property is a sectional title unit, then a levy clearance certificate must also be obtained.

The transfer, bond & cancellation documents must be lodged in the Deeds Office at the same time to ensure simultaneous registration. If different conveyancers are attending to the registration of the Purchaser’s bond, the cancellation of the Seller’s bond and / or the transfer of the property, then all these conveyancers must collaborate. From date of lodgment, it usually takes 10 – 15 business days until date of registration. The parties are furnished with final accounts reflecting the final adjustments between the parties in respect of cancellation amount, occupational rent and other matters.

1. An agreement of sale is concluded between the seller and the purchaser.
2. The seller nominates the transfer attorney to attend to the transfer of the property and the estate agent sends a copy of the agreement of sale to the attorney and to the purchaser’s bank for bond approval.
3. The transfer attorney requests bond cancellation figures from the seller’s bondholder.
4. The seller’s bondholder instructs the cancellation attorney to attend to the cancellation of the existing bond.
5. Once the transfer attorney has received the cancellation figures and the title deed or a copy thereof from the cancellation attorney, the transfer documentation are drafted, arrangments are made for signature thereof and the purchaser are alled upon for payment of costs.
6. The transfer attorney sends the draft deed and guarantee requirements to the bond attorney to enable him to prepare the bond documents.
7. The bond attorney attends to the signature of the bond documentation by the purchaser where after he issues the required guarantees to the transfer attorney.
8. The transfer attorney sends the guarantee to the cancellation attorney who then has his consent to cancel the existing bond signed by the seller’s bondholder.
9. The transfering attorney pays rates and transfer duty to obtain the transfer duty receipt and the rates clearance certificate.
10. When all three attorneys are ready, they lodge the documents at the deeds office.
11. Registration in the Deeds office varies from 10 to 15 working days depending on the backlog.

A Client will often require funds to assist in the purchasing of a property, or to improve their existing property, or to consolidate his or her debt. In order to cater for their needs they will go to a Bank for a loan. Let’s describe the Bond registration process in relation to the above needs.

The Bank will forward the letter of grant together with the title deeds to the Attorneys to register a bond for the amount of the loan that has been granted to the client. Thereafter the procedure is similar to the bond registration procedure except there is no interaction with any transferring attorneys. Whenever a Mortgage Bond has been registered it affords the client access to the funds and affords the bank good security for the loan given.