In complex and lengthy transactions like property sales, delays of any sort are not only frustrating, they can also be extremely costly and may even scupper the deal entirely, however, while some delays cannot be anticipated, it is possible to exponentially reduce the risk.
READ: Key to a successful home sale: Why working with an agent is vital
This is according to Cobus Odendaal, CEO of Lew Geffen Sotheby’s International Realty in Johannesburg and Randburg, who says: “Essentially there are two primary types of delay; the first relating to the confirmation of the sale and delays that occur once the sale has been confirmed and, in many instances, both can be avoided by doing one’s homework and having all one’s ducks in a row from the onset.
“Property transactions are known to be a protracted process with multiple steps and reams of documentation, and once the potential minefield of suspensive conditions and contractual obligations has been successfully navigated and the deal is finally done and signed on the dotted line, many people breathe a sigh of relief.
“However, the deal isn’t done until the transfer has actually happened and the anticipated downhill cruise to transfer can still become an uphill battle if one isn’t careful.”
Odendaal explains how this can happen: “One of the main reasons for delayed transfers is that the timeline is out of sync, especially when two or more deals are linked and money from one sale is needed to purchase the next property and so on.
“It’s also important that buyers budget for the transfer costs of the new property they are buying or have an access bond in place on their current home, otherwise when the attorney calls for bond cancellation that bond account will be frozen and they will not be able to access the funds.”
He adds that not giving the required 90 days’ notice of cancellation of the existing bond can also cause delays as well as avoidable late cancellation fees.
READ: Calculating the costs of selling your home
“If a homeowner is seriously thinking about selling, they should give notice to the bank holding the bond. In doing so, they are not committing to selling, merely notifying the bank of the possibility and they can keep on renewing the cancellation if their decision to sell is postponed or they can revoke the notification if they change their minds.”
One of the transferring attorney’s key roles is to co-ordinate and control all the role players involved in a transfer, including SARS (transfer duty), the municipality (Rates Clearance Certificate) and the bank.
“In order to do this as seamlessly as possible, it is essential that both the buyer and seller submit all the necessary documentation in time, as per the legal requirements and without omissions. This is especially important if either party resides in another country or is in any way difficult to contact for information and signatures.”
READ: What compliance certificates do I need when selling my home?
According to conveyancers and property Law attorneys at Abrahams & Gross, the RCC issued by the city council certifies that there are no outstanding funds due to the municipality at the time of the registration of transfer to the purchaser. This certificate is a requirement in terms of the Deeds Registries Act and must be lodged in the Deeds Office. The Registrar of Deeds will not register the transfer of a property unless the conveyancer lodges a valid RCC along with other required documents at the Deeds Office.
Rates Clearance Figures
The conveyancer will make application to the city council for the issuing of rates clearance figures. Rates clearance figures are comprised of all arrears amounts for rates, taxes, electricity, water, sewerage, and refuse, as well as an advance payment covering a period of 60 days being the period of validity of the rates clearance certificate.
Whose responsibility is it to obtain a rates clearance certificate?
It is the seller’s responsibility to settle amounts due in order to obtain the RCC. Upon request, the seller must pay the conveyancer and not the city council directly. The conveyancer will then pay the city council to ensure that the payment is linked to the application number in respect of the transfer as well as for the purposes of expedition of the issuing of the rates clearance certificate.
Once the conveyancer has paid for and obtained the RCC, the seller’s account at the city council will be in credit and the seller will no longer be required make any further monthly payments to the city council prior to transfer.
Once registration of transfer has been completed, the conveyancer submits a refund form to the city council in respect of any credit that maybe be due to the seller. This usually occurs when the registration of transfer takes place prior to the expiration of the 60-day period. The city council takes approximately four to seven months to reconcile the seller’s and purchaser’s accounts and pay the refund.
READ: Weighing the risks of home defects that have been repaired
Odendaal says that although snags and stumbling blocks can occur at any point of the transaction, they most commonly occur at the following stages:
- Bond approval;
- Bond cancellation;
- The signing of transfer documents;
- Obtaining valid compliance certificates;
- Issues encountered at lodgements requiring the removal of notes by the Registrar of deeds;
- Transfers which are unusual and more complex, such as estate transfers which require an endorsement of the Master of the High Court, which can cause a delay.
“Most of these delays can easily be avoided through prompt co-operation with the transferring attorney or, if they are outside of South Africa, by giving power of attorney to a person within South Africa who can sign the necessary documents and act on their behalf.”
“It’s also vital that the client is completely up front with the agent regarding their financial situation,” says Odendaal.
“Agents can facilitate and expedite the process by having a bond originator prequalify them and the thorough credit check will reveal any potential snags which can then be rectified before they cause any problems.
“This step is particularly important for buyers who are self-employed as banks are very strict about the documentation that they require for a bond application. At this stage I always advise all my clients to avoid making any expensive purchases that could negatively impact their affordability.”
Odendaal concludes: “Experienced estate agents will guide their clients every step of the way and as long as they are upfront with their realtors, there should not be too many problems to circumvent.
“I also recommend appointing an accomplished conveyancing attorney who is really on the ball. And, as the transferring attorney and agent work closely together behind the scenes to ensure a smooth transfer, it is always an advantage if they already have an established working relationship.”
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