In every property transaction, there are a number of variable costs that need to be considered by both the Seller and Purchaser. In the instance of a residential property transfer, these costs consist of those necessary to transfer the property from the Seller to the Purchaser. To make sure you are well informed, we have hereunder summarised the costs a Seller and Purchaser can expect to encounter in a simple residential property transfer.

SELLER:

• Bond Cancellation Fees (if applicable);

• Estate Agents Commission (if applicable);

• Payment of the Rates Clearance Figures (payable to the Local Authority);

o Any arrears amounts owed to the Local Authority with respect to rates and taxes as well as a 90-day advance payment to allow for the transfer process to take place.

• Payment of Levy Clearance Figures (payable to the Homeowners Authority); and

o Any arrears amounts owed to the Homeowners Association or Body Corporate in respect of levies as well as a 60 – 90 days advance payment to allow for the transfer process to take place.

• Payment to obtain Certificates of Compliance (Electrical, Gas, and Solar).

o Electrical Compliance Certificates;

o Electrical Fence Compliance Certificates (if applicable);

o Gas Compliance Certificates (if applicable)

o Plumbing Compliance Certificates (if applicable);

o Beetle Compliance Certificates (if applicable).

These Certificates may not be older than 1 year and are required to ensure that the property’s various installations are up to code and in full compliance with the applicable standards. Each Certificate typically costs R1 000.00.

• Other Costs

o Financial undertakings, bridging finance or loan agreements;

o Tax Directives from SARS (Withholding Tax on international transactions);

o Lost title deeds or correction of errors with existing title deed conditions etc.

PURCHASER:

• Transfer Fees

o Conveyancing Fee (as per set tariff);

o Transfer duty (payable on the purchase price to SARS);

o Rates Clearance Figure Request to Local Authority (to make provision and allow for the transfer to take place, the Seller will pay the amounts due);

o Levy Clearance Figure Request to the Homeowners Association or Body Corporate (to make provision and allow for the transfer to take place, the Seller will pay the amounts due);

o Deeds Office Fee (processing transfer and registration);

• Bond Registration Costs

o The Purchaser will have to pay the costs to register a bond over the property where the purchase is financed by a loan granted by a banking institution.

• Occupational Rent

o It may be the case that the Purchaser takes occupation of the property prior to the registration of the transfer, in this instance, the Seller and Purchaser should have made provision for occupational rent payable in the Sale Agreement. This will be paid from the date of occupation by the Purchaser (if not already in occupation) until the date of Registration in the Deeds Office.

It may be the case that there are additional costs to those mentioned above, these may arise due to several reasons, including lost Title Deeds, errors or issues with existing Title Deed conditions and servitudes, or even issues arising from the constitution of either Seller or Purchaser in the case of either being a Company or Trust.

In any property transaction within South Africa (aside from those occurring in Kwa-Zulu Natal) it is the Seller’s right to appoint the conveyancing attorney who will attend to the registration of the property transfer in the relevant Deeds office. This however is not the case in Kwa-Zulu Natal where the converse applies and the Purchaser appoints the conveyancing attorney.

In practice, however, this right is not absolute as it can be determined by the terms and conditions of the Sale Agreement concluded between the parties in respect of the Sale of the Property. It may be the case that the Purchaser (outside of Kwa-Zulu Natal) makes it a condition of the sale that he/she appoints the relevant conveyancing attorney. In this instance, and should the Seller accept this condition, the Purchaser will have appointed the conveyancer.

Although the Purchaser finances the transaction, the election to nominate the conveyancer ordinarily rests with the Seller, as the Seller has the least interest in delaying the process of transfer. A delayed transfer will result in the Seller losing out on interest as well as other opportunity costs, it may also be the case that the property sold by the Seller is intended to finance the purchase of another. In this instance, delays may cause substantial financial loss and unnecessary stress or embarrassment.

It is always important to consult with a professional prior to the signature of a Sale Agreement. Ensure that you are always well advised of your rights as well as the relevant terms and conditions of the Sale Agreement. If you are uncertain in the face of any property transaction, get in touch with our team and let us guide you through the complexities of the transaction. We will ensure that your rights are protected and allow you to make an informed decision.

Transfer duty is a tax levied by SARS on the value of a property acquired by any person by any means. This means that whether you buy a property or acquire it in any other way, you may be liable to SARS for payment of transfer duty. There are however exceptions to the general rule, which will be discussed in a later blog.

For the purpose of calculating transfer duty, SARS prescribes annual rates which determine the amount of transfer duty payable according to the value of the property. According to SARS “property means the land as well as fixtures and includes real rights in land, rights to minerals, a share or interest in a residential property company or a share in a share-block company.”

Transfer duty is only payable on the transfer of properties valued at more than R1.1 million. If the property you are buying or acquiring (as the case may be) is worth less than R1.1 million, the transaction will not attract transfer duty. However, you will still have to pay transfer costs to the conveyancer.

Transfer duty and transfer costs should not be confused, transfer costs are the costs payable to the conveyancing attorney for attending to the registration of the transfer, and transfer duty is one of these costs and is payable to SARS. Transfer duty is payable within six months of the date of acquisition of the property, failing which SARS will issue penalties for late payment. Transfer duty is however paid to the conveyancer upon inception of their appointment. It is thus the conveyancer’s responsibility to ensure the timely payment of transfer duty to SARS.