guide to conveyancing a property law

Conveyancing describes the legal process whereby a purchaser (a person, company, close corporation or trust) becomes the registered and legal owner of immovable property and ensures that this ownership cannot be challenged.

Only an attorney who is also a conveyancer may attend to the conveyancing of property and the registration of mortgage bonds.

Steps in the Conveyancing process

The first requirement for the process is a valid deed (agreement) of sale. It normally takes the form of a document entitled “Offer to Purchase”, which, once signed by both purchaser and seller, becomes a Deed of Sale (Sale Agreement).

After an agreement of sale has been signed by both seller and purchaser, a conveyancer is appointed and instructions are sent by the estate agent. The conveyancer is usually appointed by the seller to transfer the immovable property although this can be negotiated between the parties (the purchaser will pay the fees).

The estate agent will send an instruction to the conveyancer including the names of the seller and purchaser, a copy of the sale agreement and the identity numbers and marital status of each party.

The conveyancer then drafts the following documents and will contact both the seller and purchaser for signing:

  1. Power of Attorney to pass transfer – signed by the seller to authorise the conveyancer to transfer the property on the seller’s behalf;
  2. Affidavits by seller and purchaser – to declare their solvency, marital status, identity numbers, income tax numbers and postal addresses;
  3. Transfer Duty and/or Value Added Tax (VAT) Declaration – both parties sign this to confirm the purchase price which is conveyed to SARS for the calculation of transfer duty. If VAT is payable, no transfer duty will apply;
  4. Bond documents;
  5. FICA documents
  6. Upon signature of the documents, the conveyancer will present the account to the purchaser for settlement of the transfer costs. Once these costs have been paid, the conveyancer:
  7. Applies to the relevant municipality for a Rates Clearance Certificate – the seller will have to pay all outstanding rates and taxes on the property and once issued, the clearance certificate is valid for three months;
  8. Pays the necessary transfer duty to SARS and applies electronically for a Transfer Duty Receipt;
  9. Upon receipt of the Rates Clearance Certificate and Transfer Duty Receipt the conveyancer will draft the new Deed of Transfer and then lodge all documents via a correspondent in the Deeds Office;
  10. Simultaneously with lodgement of the transfer documents in the Deeds Office, all present mortgage bonds to be cancelled and new bonds to be registered will also be lodged and linked in one set;
  11. Registration of the transfer, bond and bond cancellation takes approximately 8 to 14 working days after lodgement in the Deeds Office.

The Costs Involved

The costs relating to the transfer of immovable property falls into two main categories:

  1. Professional fees
  2. Disbursements made by the conveyancer on behalf of the parties

The professional fees charged by the conveyancer are in accordance with guidelines prescribed by the Law Society of South Africa, which makes provision for a sliding scale based on the purchase price of the property. The purchaser pays these fees.

Disbursements will include transfer duty or VAT and pro-rata rates and/or levies payable to the relevant local authority and/or body corporate. Transfer duty is determined in accordance with the figures issued by SARS.

The conveyancer collects the following funds before registration / transfer takes place:

From the seller:

  1. Outstanding amounts in rates, taxes and/or levies due to the local authority/municipality and/or Body Corporate;
  2. Bond cancellation cost
  3. From the purchaser:
  4. Pro-rata provision for rates and taxes and/or levies due to the local authority/municipality and/or Body Corporate;
  5. Deeds Office registration fees;
  6. Professional (conveyancing) fees;
  7. Transfer duty and/or VAT

The time required for the process

On average, the time taken to register the transfer of a property, where a bond in involved, will be two to three months from the date that the conveyancer is instructed.

The length of time it takes to get the transaction to the Deeds Office id dependent on the reaction time taken by each party to the process. The usual time taken by the Deeds Office to inspect all the documents lodged by different conveyancers for a specific transaction is ten working days.

The parties involved in the process

Usually there are a chain of transactions linking the following parties:

  • The seller (and spouse)
  • The purchaser (and spouse)
  • The institution which previously gave the bond to the seller (and the conveyancer acting on its behalf) (bond cancellation attorney)
  • The Receiver of Revenue
  • The municipality or local authority
  • The institution which gives the new bond to the purchaser (and the conveyancer acting on its behalf) (bond registration attorney)
  • Estate agent
  • Conveyancer(s)
  • Registrar of Deeds
  • The buyer of the purchaser’s previous property (which the purchaser had to sell to obtain the cash portion of the purchase price)
  • The conveyancer acting for the purchaser in that transaction
  • The institutions which gave and are giving the loans in that transaction (and their conveyancers) and so forth.

The conveyancer has to complete the arrangements with all these parties and as such, delays are possible at any stage of the transaction.

It is important, therefore, that the purchaser should sign the documents and pay the required amounts as soon as the conveyancer calls on him/her to do so – this will help ensure that there are no unnecessary delays.

Why is a conveyancer necessary

A great deal is at stake in the transfer of fixed property. It is generally the largest single asset that a person owns and the transaction for the purchase or sale of a fixed property is probably the most important contract undertaken by individuals.

The law therefore provides that only qualified conveyancers may attend to the transfer of fixed property and related transactions. This is not only to give proper protection to the rights and interests of the public, but also to safeguard the integrity of the South African land registration system, which is universally regarded as one of the best in the world.

When all the checks have been made, all the procedure followed by the conveyancer and the property has been registered in the name of the purchaser, the purchaser can be assured that he or she has the best title to the property.