With regards to immovable property Sale and Transfer transactions, there are various costs and fees involved which must be settled in order for the process to be concluded. Knowing what each party (seller or buyer) must pay for is important so that one is prepared beforehand to avoid unnecessary delays.
Despite these obligations there is nothing that prevents parties from agreeing in the contract, in considered circumstances, to vary the payment obligations as long as it is not against the law.
The Seller is responsible for any rates and service arrears accrued on the property before the transfer. This is premised on an assumption that, unless otherwise proven, the rates and balances on utility accounts accrued owing to the seller’s use of the property or another party (tenant) at the behest of the seller. The seller and buyer may agree that these be settled out of the purchase price.
In this category will also be levies that may be owing to Home Owners’ Associations or, the Body Corporate if the property is in a Sectional Title Scheme. If the property is bonded, the bond cancellation fee will be the responsibility of the Seller as well. It ranges from R3000 to R4000 or other such amount and is still applicable even if there is no arrear balance on the bond.
When a house is sold there are certificates required such as:
These are also the responsibility of the Seller to secure at own cost. Some Home Loan lenders insist on these in their consideration of a bond application.
The most important aspect before any sale or transfer can proceed, is proof that the Seller holds title to the property and this is proven through producing the Title Deed. The Seller must foot the cost of securing a copy of this very important document.
The other obligations of the Seller include payment for any necessary repairs agreed to between the parties, Agent’s commission, penalty bond interest (if insufficient notice is given to bond financier to cancel the bond), financial undertaking for the seller as well as applicable tax requirements.
The buyer of the immovable property is advised to take note and prepare as well for the costs and fees that apply so that the process may not suffer unnecessary delays. On top of that list would be the transfer costs, to effect the change of ownership from the seller to the buyer in completion of the transaction. In this category is the transfer duty, which however is not payable if the Seller is VAT registered and the sale is subject to transactions which VAT will be taxed accordingly.
In sale transactions where the buyer secures a bond for the purchase, bond costs attendant to such facility are the responsibility of the buyer. The lender will guide and explain all the attendant bond costs to the Buyer so that they are aware of their financial obligations on the bond account.
It is not uncommon for the Buyer to move into the property before transfer is effected. Legally speaking, until such transfer the property belongs to the Seller and therefore, where the Buyer occupies the property before such transfer occupational rent is applicable. In other terms this will be like a Lessor-Tenant scenario until after transfer of the property to the Buyer.
In the event that the Buyer intends on subdividing or renovating the property in question, the buyer must also foot the cost for the conveyancer’s certificate with regards to title restrictions as well as costs pertaining to approved plans if the purchase agreement does not require this from the Seller. The Buyer’s obligations also include a Tripartite Agreement (if applicable) which sets out the obligations and responsibilities of all the parties in the transaction.
Knowing what each party pays for in a property sale and transfer transaction presents preparedness and avoids unnecessary delays. We assist in mortgage origination and bridging finance in property purchase and sale transactions. Contact us for professional, personalised and comprehensive assistance.
The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter. One should not act or refrain from acting on the basis of any content included in this site without seeking legal or other professional advice. The contents of this site contain general information and may not reflect current legal developments or address one’s peculiar situation. We disclaim all liability for actions one may take or fail to take based on any content on this site.
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