What Costs Are Involved In The Property Transfer Process In South Africa

Knowing what costs are involved in the property transfer process enables you to budget accordingly when buying a house in South Africa. Allowing for approximately 10% of the purchase price of the property for all the other costs involved in purchasing a property is suggested as a general ballpark figure. Below is a full list of the expected costs involved when commencing with the transfer of property process.

1. Transfer Costs

The transfer cost is calculated on a sliding scale related to its purchase price. Guidelines for Transfer Costs are set by the Law Society.

2. Transfer Duty

Transfer duty is a fee that is payable to SARS and is only relevant when a property’s value or its purchase price (whichever is of higher value) exceeds R 1 000 000. Transfer duty is also calculated on a sliding scale based on guidelines provided by SARS. Transfer duty receipt, once paid, is received from SARS. Transfer duty is not applicable where the seller is VAT registered and the transfer is part of the seller’s VAT-able portfolio. This is likely to mean that the purchase price will be VAT inclusive or that the purchase price will have VAT added.

3. Bond Costs

If the buyer has applied to the bank for a bond, bond costs will vary depending on the value of the bond to be registered. Guidelines for bond costs are set by the Law Society. An initiation fee is payable to the bank, as given in the Letter of Acceptance (stipulated by the relevant bank).

4. Occupational Rent

Prior to registration, if the buyer takes occupation of the property, they will be liable to pay occupational rent, which will be stipulated in the Offer to Purchase. If a pro-rata refund is applicable, it will be refunded to the buyer once the transfer has been completed.

5. Levies

In the case of a Sectional Title Transfer, obtaining levy clearance consent will demand a fee. From the date of registration, the pro-rata portion of the levy will be payable to the Body Corporate by the buyer for levies related to the monthly levies account. Special levies may be stipulated in the Offer to Purchase, should there be any other levies payable on the Sectional Title Transfer. For both buyer and seller, the Body Corporate will determine the pro-rata payment of special levies before the registration of the transfer.

6. Rates Clearance Certificate

The council will also demand a fee for the Rates Clearance Certificate.

7. Home Owner’s Association Consent

If applicable, and stipulated in the Title Deed, there will be a cost payable for obtaining consent for the transfer from the Home Owners’ Association.

8. Agent’s Commission

With the proceeds of the sale on the date of the transfer, the agent’s commission will be payable as agreed in the commission structure outlined in the Offer to Purchase. The commission due is either VAT-exclusive or VAT-inclusive, which must be clearly stipulated in the Offer to Purchase.

9.Bond Cancellation – 90 days’ penalty interest

Your bank must be provided with a notice of your intention to cancel the bond. In the process of selling your property, 90-days’ penalty interest will be added to the bank-issued cancellation figures. The penalty interest is calculated from the time notice is given, at your current bond’s interest rate, on the outstanding settlement amount. (This includes an additional month’s instalment, and any annual insurance or assurance due in the given period.) If your bond is cancelled before the 90 days have elapsed, the pro-rata penalty interest is calculated on the remaining days left in the 90 days’ penalty period.

10. Bond Cancellation Fee

The bank appoints an attorney to represent them to attend to the cancelation of any existing bond(s) registered in relation to the property. A cancellation fee is attracted regardless of whether the existing bonds have been paid up or not.

11. Rates and Services

Municipal rates and services are calculated based on any outstanding amount (including amounts in arrears). Advance payments on any applicable services are possible and vary by municipal region. Once the transfer has been completed, credit due to the seller will be refunded by the municipality. Before the Rates Clearance Certificate can be handed over to the transferring attorneys and the property can be registered at the Deeds Office, the rates figures must be settled.

12. Levies and Special Levies

In the Offer to Purchase, special levies may be stipulated on a Sectional Title Transfer. The pro-rata payment of the special levies, which the buyer and seller must pay before the transfer can be registered, are calculated by the Body Corporate.

13. Compliance Certificates

Where applicable, Beetle, Electrical, Electric Fence, Gas, Plumbing, and other Compliance Certificates must be supplied by the seller. Additional work mandated for the issuing of Compliance Certificates will come at the cost of the seller.

14. Other Considerations

If the Deed of Sale contains any repairs, they will need to be made before the registration of the transfer. If the original Title Deed on an un-bonded property has been misplaced, an application must be made at the Deeds Office for a certified copy of the Title Deed. Should funds need to be bridged in order to pay for rates figures on behalf of the seller, an admin fee is applicable. This fee will be refunded from the proceeds of the sale on the date of the transfer.

Consult With Experienced Property Transfer Attorneys In South Africa Today

PM Attorneys’ property transfer attorneys assist sellers and purchasers of property across South Africa. Our legal practitioners specialise in attending to all aspects involved in the transfer of ownership of immovable property, including transferring private/residential properties such as houses or sectional title units or commercial properties such as shopping centres. Be sure to consult with us prior so we can advise you on all the costs involved in the transfer process.

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