The formalities in respect of sale of land (property) in South Africa:

Section 2 of the Alienation of Land Act 68 of 1981 (“the Act”) provides that “No alienation of land after the commencement of this section, shall subject to the provisions of section 28, be of any force or effect unless it is contained in a deed of alienation signed by the parties thereto or by their agents acting on written authority”

Thus, for any sale and transfer of immoveable property to be legally binding, it must be contained in an offer to purchase, which after is signed by both the seller(s) and purchaser(s) or their duly authorized agents becomes a deed of alienation. Thereafter, ownership of property is transferred from the seller to the purchaser by registration of a deed of transfer executed by a duly authorised Conveyancer and attested by the Registrar of deeds at the relevant Deeds office.

Transfer/Conveyancing process:

• The seller or the buyer, depending on what the parties agreed on, will appoint a transferring attorney (“the Conveyancer”) of their choice to attend to the transfer process and registration at the deeds office. The Conveyancer usually receives the instruction to transfer from an estate agent that facilitated the sale of the relevant land. The instruction may also come directly from the seller(s) or purchaser(s) if an estate agent was not the effective cause of the sale of the relevant property.

• Upon receiving the instruction to transfer, the Conveyancer will send out the first letters to the seller(s), purchaser(s), and the estate agent (if applicable) acknowledging receipt of the instruction to transfer the property and request FICA documents and other relevant documents from both the seller(s) and purchaser(s).

• Thereafter, the Conveyancer will examine the agreement thoroughly for any suspensive or other conditions that need to be complied with. Note that if the agreement is subject to the purchaser obtaining a loan approval from a financial institution, this suspensive condition must be complied with before the Conveyancer can proceed with the transfer. Once a loan has been approved, bond attorneys will be appointed by the relevant financial institution and the agreement comes into formal agreement.

• On receipt of all the prerequisite information, approval of the loan and fulfilment other conditions, the Conveyancer on behalf of the seller will request clearance figures from the municipality, levy figures from the relevant body corporate or home owners’ association (if applicable),bond cancellation/discharge figures payable by the seller to the bondholder in order for the bondholder to consent to the cancellation of the bond or release of the property from the operation the bond (if applicable), and request guarantees for the repayment of the existing bond registered over the seller’s property, guarantee for payment of the costs of the bond cancellation attorneys, and/or guarantee for payment of the balance or full amount available on the loan approved from the purchaser’s bond attorneys (if applicable).

• The Conveyancer will thereafter prepare transfer documents for signature of the parties as well a pro forma account for their transfer costs to be paid by the purchaser. Where the purchaser will be registering a mortgage bond over the property, a new deed of transfer will be prepared and a copy sent to the attorneys attending to the registration of the mortgage bond to enable them to draft their bond documents.

Upon receipt of the clearance figures, levy figures and payment of the transfer costs and signature of the documents, the Conveyancer will:

• Pay clearance figures and obtain a rates clearance certificate from the local authority;
• Pay levy figures and obtain levy certificate (if applicable);
• Submit and pay transfer duty (if  transfer is not exempted from payment of transfer duty) and obtain transfer duty receipt or transfer exemption receipt (if no transfer duty is payable); and
• Attend to any other conditions that must be complied with before lodgment.

As soon as the transfer documents are ready for lodgement, linking of lodgment must be arranged with other attorneys (bond cancellation/release and bond registration attorneys) in order to lodge transfer, bond cancellation/release and bond registration transactions in a set of deeds, if applicable.

After registration has taken place, all the parties concerned will be notified. The purchaser and seller will each receive reconciliation statements of account together with the relevant proof of payment and letters of confirmation of registration. Where the Conveyancer has undertaken to carry out payment of the estate agent commission and/or cancellation costs of the bond cancellation  attorneys on behalf of the seller, such a commission and costs must be paid out on the date of registration , or as soon as the funds are available.

Upon receiving the new title deed from the deeds office, the conveyancer will close the file. If the property is mortgaged, the new title must be sent to the bond registration attorneys for the safekeeping by the bondholder. If the property is not mortgaged, the new title deed must be handed to the new owner.

NB: The transfer process from the date of receiving instruction to registration could take between 4 to 6 weeks, provided that everything is in order. And the process from lodgment to registration at the deeds office could take between 7 to 10 days. Lastly, It is advisable for the purchaser to pay any deposit of the purchase price (if applicable) into a trust account of the Conveyancer for the benefit of the seller pending registration as opposed to paying directly to the Seller’s account.

The content of this article is intended to provide a general guide to the subject matter. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Contact us for bespoke legal advice on info@rnkinc.co.za

By Ndivho Netsianda