SELLING A HOUSE

The purchase or sale of a home is probably the single largest financial transaction a person will be involved in during his/her lifetime. We hope that this article will provide some information and background to such a transaction from a Seller’s point of view but we emphasis that it is no substitute for seeking proper legal advice from an attorney – preferably a conveyancer. Furthermore, it is important that the Seller insists on appointing the Conveyancer as the Seller then maintains control and ensures the process is driven by the party who has the least interest in delaying a transfer. A delayed transfer can have serious consequences for a Seller.

The main stages of the sale and transfer of a property are as follows:

Marketing of your property. This can be done privately but is usually done by an Estate Agent instructed by you.
The Estate Agent finds a Purchaser and submits an Offer to Purchase for signature. Before signing you should consult your attorney to ensure that the terms of the Offer to Purchase/Deed of Sale meet your requirements and you are adequately protected.
Instructions to your conveyancer to register the property in the Purchaser’s name.
Preparation and signature of the transfer documents by you and the Purchaser.
Lodgement of the transfer and mortgage bond documents in the Deeds Office for registration.
Registration of the property in the name of the Purchaser, the Purchaser’s mortgage bond and payment of the net proceeds of the sale to you.

The people you will be dealing with are:

The Estate Agent

In the early stages the Estate Agent is the most important person. Most Estate Agents prefer a “sole mandate”, i.e. the right to market your property for a period to the exclusion of other agents but you are entitled to appoint one or more agents. If you do, be careful to appoint one or more reputable registered agents. It is essential that you choose Estate Agents who:-

Know and understand your requirements;
Are familiar with the area;
Are able to properly advise as to the price you can expect for the house; and
Will market the property enthusiastically.

The Estate Agent markets the property by:-

Placing advertisements in newspapers
Showing the house to their existing customers;
Showing it as a show house;
Listing on a website.

The Estate Agent will find a Purchaser and submit a Deed of Sale/Offer to Purchase signed by the Purchaser to you. Although you may be advised that it is not necessary to do so, a prudent Seller will submit the Deed of Sale to his/her attorney at this stage to ensure that the agreement reflects the Seller’s requirements. Once signed by you, the Estate Agent must forward the Deed of Sale to the conveyancer you have chosen as soon as possible to enable him/her to commence the conveyancing process.

Estate Agents are subject to a code of ethical conduct and they are bound to look after your interests as Seller at all times. The Estate Agent is remunerated by you for his work and expenses (commonly referred to as a commission or brokerage) which is calculated as a percentage of the sale price. You are free to negotiate a lower commission percentage if you wish and generally most Estate Agents are flexible in this regard.

A Seller is always at liberty to market and sell his property himself without the use of an Estate Agent’s services. In such an event it is imperative that the Deed of Sale be prepared for the Seller and Purchaser by a professional person and the prudent Seller will refer the matter to his attorney for the preparation of the document.

The Conveyancer

Conveyancing is the legal process whereby a person becomes the registered and lawful owner of fixed property.

Only a Conveyancer is entitled to attend to the registration in a Deeds Office of various transactions involving fixed property. A Conveyancer is an attorney who has passed a special examination which entitles him to practice as a Conveyancer.

It is said that our system of land registration is one of the best in the world and it maintains extremely high standards. Conveyancers are part of this system. As a result property owners and financial institutions can be certain that their rights of ownership in property are unassailable and this security of tenure is an important part of our economy.

It is important that you reserve the right to appoint a conveyancer. You, (not the agent, nor the purchaser) have the right to nominate a conveyancer who can look after your interests.

The Conveyancer’s responsibilities:

Check the terms of the Deed of Sale.
Ensure that the deposit (if any) is paid and dealt with as provided for in the Deed of Sale.
Arrange for the cancellation of the Mortgage Bond registered over the property – note you must continue to effect payments on your bond until the property is transferred to the new owner.
Ensure that the Purchaser’s bond has been granted and furnish the Conveyancers registering the Purchaser’s bond with the necessary information to enable them to prepare the bond documents.
Check Deeds Office records as to whether there are any interdicts registered against the property or the seller such as attachments or insolvency, which would prevent the transfer from being registered.
Ensure that any occupational interest provide for in the Deed of Sale is paid or collected.
Prepare the documents for signature after checking the parties’ personal particulars – the Conveyancer must ensure these personal particulars are absolutely correct. This requires an investigation into correct names and identity number, marital status, domicile at the time of marriage and other relevant factors.
Obtain a Rates Clearance Certificate from the Local Authority. Rates and service charges for the property for the clearance period must be paid in advance.
Pay Transfer Duty – a tax based on the value of the property. The Purchaser is normally required to pay the Transfer Duty prior to registration of transfer as a Transfer Duty receipt must be submitted to the Deeds Office before registration of transfer can take place.
Prepare the new Deed of Transfer for registration in due course.
Lodge the deeds and supporting documents (e.g. rates clearance certificate, transfer duty receipt) at the Deeds Office for examination. All the linked transactions must be lodged simultaneously – that is to say, the Transfer, the Cancellation of any Bond, the new Bond and, sometimes, the Transfer of the Purchaser’s property.
Register the Transfer if the Deeds are approved for registration and if the financial aspects are in order:-
- The balance owing under the existing Bond must be paid.
- The deposit must be collected from the Estate Agent.
- The money secured by the Purchaser’s new Bond must be collected.
- Any shortfall, including the Purchaser’s share of rates, occupational interest, etc.,

must be collected.

On registration you must be paid the net proceeds of the sale price.
Keep the parties fully informed of the anticipated date of registration and of any problems which might cause a delay.

The Deed of Sale may specify a date of Transfer; otherwise 8 weeks will normally be required from the date the Conveyancer is instructed to attend to the registration of transfer.

The Seller’s responsibilities:

Appoint Estate Agent.
Advise Estate Agent of the name of your conveyancer who is to attend to the transfer.
Sign the Deed of Sale after discussion with conveyancer.
Furnish the Conveyancers with the information needed, on request.
Furnish the Conveyancer with the Title Deed if you hold it yourself.
Sign Transfer documents when requested to do so.
Maintain Bond and Rates payments either until Transfer or until the Conveyancer advises you to stop.
Give occupation of the house to the Purchaser on the date agreed. The house must be clean and tidy and in the condition it was when sold.
Keep the insurance on the property in force until Transfer. If you have a bond with a financial institution this will be done automatically until the Bond is cancelled when the insurance cover will also lapse.
Ensure that the necessary compliance inspections have been and that any problems found are attended to – the Estate Agent or the Conveyancer will assist in ensuring that this is done but it remains your responsibility.

Value Added Tax

If your property forms part of a business enterprise or you conduct a business enterprise from part of your property and the enterprise is registered as a Vendor under the Value Added Tax Act, then the sale of the property will be regarded as a Vatable Transaction and you will be obliged to account to the Revenue Authorities for VAT on the selling price or part thereof.

This could have serious financial consequences for you and it is vital that you seek professional advice from an Accountant or your Attorney in this regard in order to structure the sale and purchase price to avoid what might turn out to be a considerable financial loss.

Some terms and conditions of a Deed of Sale:

Beetle Free Certificate

There are a number of wood borer beetles which damage the woodwork of houses. Two types are so called “notifiable” beetles – Oxypleuris Nodieri and Hylotrupes Bajulus. In addition, there is a so called “furniture beetle” – Anobium Punctatum.

Deeds of Sale do not usually include a reference to “furniture beetle”, but financial institutions sometimes require a certificate in this regard. Beetle free clauses sometimes include reference to dry rot. It is usually the Seller’s responsibility to attend to any beetle infestation in accordance with the Deed of Sale.

You could be put to considerable expense to replace infested timbers, but a Purchaser is entitled to know that he is getting a house with hidden problems. For practical reasons only the accessible portions of the house are inspected and floors under fitted carpets or eaves will not normally be inspected. Ideally you should have your house inspected for beetle infestation prior to entering into a Deed of Sale. The firm inspecting your property will give a quotation for any beetle treatment or replacement of infested timbers and you would then be aware of the cost involved in this regard.

Electrical, Electric Fence and Gas Installation Compliance Certificates

Any home owner or home/flat occupier is obliged to be in possession of current Compliance Certificates in respect of such installations on their premises. It is normally the Seller’s responsibility to furnish this. The certificate can only be issued if the installation if reasonably safe and free from defects. Again for the reasons stated above it would be prudent to have the installations inspected prior to binding yourself under a Deed of Sale.

Voetstoots

The Purchaser buys the house as he/she sees it. If there are obvious problems or patent defects the Seller need not point them out. The position with hidden or latent defects is different. If the Seller deliberately conceals a latent defect he/she may have acted fraudulently or if he/she fails to point out a defect (which is known but hidden) and is aware it would be material to a purchaser if they were aware of it.,

Address Domicilium Citandi et executandi

This is the street address elected by a party as the address at which legal notices in the event of a dispute may be served. Be careful when choosing this address as service of any legal documents at that address, even if you may no longer be residing there, will be regarded as good in law and it will be deemed that you have received the process served.

Transfer and Bond costs

Normally paid by the Purchaser and tariff guidelines are issued from time to time. You will have to pay for the cost of cancelling the existing Bonds and for any additional services you may have requested the Conveyancer to provide on your behalf.

Occupational interest

This is the equivalent of rent, payable as specified in the Deed of Sale, by the Purchaser from the date of occupation of the property to the date of transfer in his name. If no occupational interest is specified and the occupation date is different from the date of transfer, a rate of occupational interest will have to be agreed upon. It is preferable to negotiate this up front. Note this constitutes taxable income in the hands of the party receiving it.

Fixtures and fittings

The sale will include, unless specified, all objects which are actually attached to the structure, such as light fittings, pool filters, mirrors screwed to walls, twirl dryers, fitted carpets, etc. To avoid disputes it is important for you to identify in the Deed of Sale what fixtures and fittings do or do not form part of the sale. It is preferable to state clearly what items you intend to remove particularly if they could be construed as fixtures or fittings.

Risk and Insurance

Unless the agreement provides for a specific date, for example the Date of Possession, risk passes to the Purchaser on signature of the Deed of Sale. A prudent seller would maintain his insurance cover until registration of transfer.

Possession

This is the date when the Purchaser takes responsibility and control of the property including the responsibility for any tenant and the rights to any rental.

Vacant Occupation

The Purchaser must get an empty house, i.e. free of any occupiers unless otherwise stipulated.

Liability for rates

Generally, the Purchaser becomes liable for rates from date of Transfer and the Seller pays the amounts required for clearance in advance. Either the local authority or the Conveyancer will determine the respective parties’ responsibility for rates over the clearance period.

Disclaimer

Please note that tis brochure is not a substitution for proper legal advice and whilst every effort has been made to ensure the contents hereof, no liability shall follow from reliance hereon.