Conveyancing and the Transfer process
What is Conveyancing?
A conveyancer is a lawyer who has passed certain examinations which allow him to specialise in the transfer of properties and to register mortgage bonds and other deeds in the Deeds Office. The conveyancer ensures that all financial arrangements have been made to pay for the property upon registration of transfer and generally attends to the payment of the bank to discharge any mortgage bonds and pays the nett proceeds of the sale to the seller.
For a diagrammatic representation of what happens after an agreement to purchase a property has been signed click on steps in a transfer. This is the same if you want to see what happens after a bank has agreed to lend you money against a mortgage bond being registered.
Many different steps need to take place in registering a transfer and even in the simplest transaction at least three conveyancers and three government or municipal departments may be involved to some extent.
A Visual Representation of the Conveyancing Process
THE TRANSFER PROCESS
THE AGREEMENT OF SALE
The sale agreement is a contract between the seller and purchaser agreeing to the terms for the sale of a property. This is the first step in the transfer process and your estate agent will discuss the terms of the agreement so that you understand what you are committing to. You are entitled to ask your lawyer to look through the agreement as well. It is obviously important that you choose your estate agent and conveyancer carefully as this will probably be one of the biggest financial decisions you will make.
All sale agreements may contain suspensive conditions which need to be fulfilled before the transfer process can begin eg that the agreement is subject to the purchaser managing to sell his/her property or that the purchaser is able to secure a mortgage loan from a financial institution for a portion of or the full purchase price. Once the suspensive conditions have been fulfilled the conveyancer will be instructed to proceed and the transfer process can then commence.
The conveyancer will require the purchaser and seller to provide a variety of documents such as identity documents, marriage certificates, ANC's, divorce orders and any document that affects their legal status, as well as the title deed to enable them to prepare the transfer documents. A utility bill which reflects the parties physical address will also be requested as proof of residence to comply with FICA requirements. Once the transfer documents and pro-forma account are ready the parties will be contacted to sign the transfer documents and the purchaser will have to pay fees as follows :
- an amount equal to approximately three months rates to be paid in advance in order that a rates clearance certificate can be obtained from the rates department, or a levy clearance certificate for a sectional title unit (again this requirement must be met before the Deeds Office will register transfer);
- the Deeds Office fee for lodgment of the registration documents.
Following payment of the proforma account and signature of the documents, the conveyancer can apply for the rates clearance certificate and pay the transfer duty and obtain a receipt. This receipt, together with security for the full purchase price (in cash and/or guarantees from the bank and/or undertakings by other conveyancers), and all the other documents will be sent to the Deeds Office to be lodged.
CANCELLING THE EXISTING BOND
The seller may still owe money to a bank in respect of a mortgage bond over the property, and this bond will have to be cancelled at the same time as the property is transferred to the purchaser. The bank holds the title deed as security and sends this to the conveyancer with the cancellation figures, which is the amount the seller still owes to the bank. When registration in the purchaser's name takes place, the seller's bond is cancelled and the bank is paid the cancellation figure. The seller's bank decides which conveyancer will attend to cancellation, and the seller receives the balance of the purchase price once the cancellation figure has been paid to the bank. In the event that the transferring conveyancer and the cancellation conveyancer are not the same, they will have to liaise closely with each other to ensure that the transfer documents and cancellation documents are lodged in the Deeds Office together.
REGISTERING THE MORTGAGE BOND
If the purchaser obtains a bond to pay the purchase price this will have to be registered simultaneously with the transfer documents and the seller's cancellation documents. The conveyancer attending to the registration of the bond is appointed by the bank and this may not be the same conveyancer attending to the registration of the bond. The transfer conveyancer and bond conveyancer liaise closely with each other to ensure that the bond and transfer documents are lodged at the Deeds Office together. This process is expedited if the bond and transfer conveyancers are one and the same, as all the documents can then be drawn and signed at the same place. The transfer conveyancer obtains the guarantees from the purchaser's bank as proof that the purchase price will be available on date of registration of the bond. Some of the conditions which the bank may require are met before bond registration include: signing bank documents; signing a suretyship; ceding or obtaining a life assurance policy; and probably insurance over the building on the property.
Once the transfer, bond and cancellation documents are simultaneously lodged by the transfer, bond and cancellation conveyancer(s) in the Deeds Office, registration can take place. It takes between a week and ten days for registration to come into effect, and the seller will be paid out within two days of this date. A final account is sent to the seller and purchaser reflecting any final adjustments eg levies and/or occupational rental.
A FEW HELPFUL DEFINITIONS:
- A conveyancer is an attorney who has passed a conveyancing exam over and above his legal qualification. Preparation and registration transfer and bond documents is complicated and requires a meticulous eye. The conveyancer is obliged to comply with the Deeds Registries Act and the regulations of the Deeds Office and it is thus important that the services of a reputable conveyancer are engaged.
- A title deed is also called the deed of transfer and records ownership of the property, a description of the property and the owner's details. The conveyancer prepares the title deed and once this is registered in the Deeds Office the purchaser becomes the registered owner of the property.
- The Deeds Office records ownership of land in South Africa and ensures security of title to owners of immovable property. All transfers, bond registrations and bond cancellations must be registered in the Deeds Office. KwaZulu-Natal's Deeds Office is in Pietermaritzburg, and there are eight other Deeds Offices in South Africa.