Why can seller appoint conveyancer?

One of the most frequently asked questions is why, if the buyer of a property is paying the conveyancing attorney, the seller has the prerogative to appoint him.

The arrangement, says Tony Clarke, MD of Rawson Properties, is logical because in a property transaction the seller is far more at risk than the buyer. As the normal costs payable by a purchaser are insignificant in comparison to the property’s value, it is important that the seller keeps control, says Clarke.

“This is especially true where the buyer takes possession before transfer and pays an occupational rent that is lower than his bond repayments. It is then in his interests to delay transfer as long as possible within the four-month period allowed before the Receiver charges double transfer duty.”

If the seller does not have his own attorney, says Clarke, the real estate agent is allowed to recommend a conveyancer. This can give rise to questions as to why the conveyancer has been appointed, but in his experience agents almost always recommend a conveyancer who has a proven track record, is reputable, efficient and can expedite the transfer.

Most conveyancers' fees, says Clarke, are the same because they are prescribed and regulated by the law societies of South Africa – but in some cases the buyer will ask for a specific conveyancer to be appointed because this conveyancer has offered a reduced fee.

Conveyancers, says Clarke, are often willing to do this if they are allowed to handle both the conveyancing and the bond registration assignments.

However, many commercial banks now insist that different conveyancers are made responsible for these tasks. The reason for this, he said, is that with two conveyancers, the chances of the price being “loaded” and fraud committed against the banks are significantly reduced.

“A loaded deal is one in which a fictional higher price is listed on the sale document so that the buyer can get a bigger bond. In these cases an ancillary secret agreement allows the buyer to pay less or to pay back the seller in cash on the excessive amount.”

If a buyer does ask that his conveyancer be used, the way to prevent any conflict of interest is to insert a clause to the effect that the seller nominates this conveyancer, Clarke says. “This reinforces the message that the conveyancer represents the seller’s interests.”

For more information contact Tony Clarkson on 021 658 7100 or send an email.

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This still doesn't explain why the purchaser has to pay the attorneys' fees where the attorney is patently working for the benefit of the seller. This arrangement off course works for the benefit of the attorneys as the purchaser is in no position to negotiate about the amount of the fees and simply has to cough up what he is charged. I have found that by insisting that I as the buyer could appoint the transferring attorney I have saved literally thousands of rand, they will come down as much as 50% and still give good service. In one case where the seller insisted on his attorney we agreed that the purchase price be increased by 50% of the transfer fees and that he would pay the attorney. Buyers should realise that this is an issue that can be negotiated about, but having been an estate agent myself I understand why estate agents don’t encourage this. – Frans Verloop