Guidelines For A Smooth & Stress-Free Property Sale & Transfer Process

Guidelines For A Smooth & Stress-Free Property Sale & Transfer Process

CCH asked conveyancer Michelle Heswick and Koos la Cock from Jooste Heswick Inc Attorneys to provide us with some guidelines which may assist the parties to achieve a smooth and stress-free property transfer process.

According to them parties to a property sale, either as Buyers or as Sellers, hope the experience to be "plain sailing". There is no reason for this not being so and applying your mind to the following suggestions, will assist in ensuring a positive experience.

1. It is important for a Purchaser to choose the correct purchasing entity i.e. natural person, company or trust. This decision may have far reaching consequences in the future, especially in relation to estate planning and tax consequences.

2. If a Buyer or a Seller require someone else to act on their behalf, ensure that the person who is given such authority is duly authorised, either by way of a Resolution deposed to by the directors / shareholders / trustees of a legal entity, or, by of a Special Power of Attorney for an individual.

3. The Purchaser bear the responsibility for the payment of transfer costs (payable to the conveyancers) which include transfer duty (due to SARS). Transfer duty is levied at the same rate for legal entities and natural persons and is exempt from property sales where the value / purchase price is less than R1m. The purchaser is also liable for the Conveyancer's professional fees and the associated expenses. The Seller's costs are limited to the expenses associated in obtaining compliance certification (electrical, beetle, electric fencing, plumbing, swimming pool), payment of Estate agent's commission and the amounts required to cancel an existing mortgage bond, if applicable.

4. In the event of a Purchaser requiring bond finance, you are advised to contact your bank, or the appointed Mortgage originator, as soon as the Agreement of Sale has been signed. Also ensure that the finance application and supporting documentation are submitted forthwith in order to provide sufficient time to negotiate the most preferable interest rate.

5. If the property you are buying will be utilised as your primary residence, you are to take note of the benefit of the primary residence exclusion. This will constitute a significant saving on the eventual sale of the property, as the first R2 million of profit is exempt from Capital Gains Tax (CGT) for SA tax residents (this may include foreigners who hold permanent residence). This benefit, as well as the Annual exclusion, is only applicable if the property is bought and registered in the name of an individual, ie. natural person/s.

6. If you are purchasing the property in the name of a VAT registered entity and such purchase forms part of an entity's enterprise, you may claim back the VAT or transfer duty (whichever applicable), either as a VAT input or as a notional tax input. There are very specific requirements that need to be met and it is very important that you avail yourself of the tax consequences which may affect you in time to come. We suggest that you discuss this option with one of our experienced conveyancers before taking this decision.  

7. If the Seller is a VAT vendor and the sale forms part of the VAT vendor's enterprise, the Buyer is not obliged to pay transfer duty as the Seller will be liable for the payment of Output VAT - the liability for the payment of VAT or Transfer duty is mutually exclusive, ie. both these taxes are not levied in one property transaction. When VAT is payable it is important to ensure that the parties are up to date with the filing of their VAT returns with SARS, otherwise the transfer will be delayed since SARS will not issue a receipt until the parties are compliant.

8. Pre-incorporation agreements are void in respect of Trusts and unnecessary in respect of Companies as we can assist you in obtaining a shelf-company within an hour and with which entity you may then transact, if so required.

9. Avail yourself of your rights and obligations as owner where a Home owners Association is applicable, or, if you are buying in a Sectional Title scheme, take note the rules of the Body Corporate.

10. Consider paying the balance purchase price into the trust account of the Conveyancer attending to the transfer of the property. The alternative to this option is to provide a guarantee from a reputable financial institution - it may however be costly to obtain a guarantee from a financial intuition.

11. Specify a practical date for transfer and occupation bearing in mind the personal considerations and operational requirements pertaining to each party involved in the sale. An efficient conveyancer should be able to transfer a property within 6-8 weeks.

12. Alterations or additions prior to transfer of the property is not recommended as it may pose risks for all parties concerned. In exceptional circumstances and in the absence of alternatives, instruct the Conveyancer to draft a special condition or an Addendum specifying each parties' rights, obligations and practical steps to mitigate the associated risks.

13. If you are buying a new property and you require your existing home to be sold, it is practical to nominate the same conveyancer to attend to both property transfers - this may save time, effort and money as you may then be in a position to negotiate a more favourable conveyancing rate.

14. Specify all items which you deem to form part of the sale. It may happen that parties dispute an item being a fixture, fitting or an item which does not form part of the sale and may be removed. Your experienced Estate agent will offer valuable guidance in this regard.

15. Attend to signature of documentation and required payments upon request by the Conveyancer to ensure that the transfer of your new property is registered timeously.

16. It is the Seller's right to nominate the Conveyancer. Ensure that the conveyancer which you consider is reputable, experienced, knowledgeable and has a proper infrastructure to enable him/her to effectively process the transfer.

17. And lastly, but not the least, some personal advise: Property transactions evoke emotions - happiness if you are young and you need a new home as your family is expanding, and, sometimes unfortunately sadness when you are older and you need to move to a home which is more manageable. We as your Conveyancers, together with your CCH agent, look forward to walking this road with you and to ensure a memorable experience which you will remember as plain sailing!