South Africa has one of the best and most secure systems for property registration and ownership in the developed world. On receipt of a signed and accepted Offer to Purchase the property can be transferred, and once transferred and registered the owner has an unassailable right to the property that cannot be overturned by anyone.
"This compares well with other countries, where a property can be lost to a better offer before registration and buyers need to take out title insurance to protect their rights of ownership," says Mike Bester, CEO of Realty1 International Property Group. "However, the process of transfer and registration is still long and complex, and many people don't understand how it works."
The seller remains the official owner until the property is transferred into the buyer's name, says Bester. There are a number of factors that can delay this happening, including suspensive conditions such as the need for the buyer to sell his existing property before being able to obtain a bond on the new property.
"Transfer of property must be done by a conveyancing attorney," says Bester. "The transferring attorney is usually appointed by the seller but the buyer may choose his own attorney to act on his behalf if he prefers. The process also requires a bond or registration attorney to register the buyer's new bond, and a cancellation attorney to cancel the seller's old bond, although all these tasks can be done by the same attorney. The purchaser will pay the fees of both the transferring attorney and the bond attorney, and the seller is responsible to pay for the cancellation attorney."
Once the buyer pays his deposit, both buyer and seller receive a copy of the deed of sale while the original goes to the transferring attorney for him to draft the necessary documentation. The cancellation attorney obtains the cancellation amount from the seller's existing bond holder and applies for the rates and taxes clearance from the municipality. All rates and taxes arrears must be paid in full before the clearance will be given.
"For sectional title properties, a levy clearance must also be obtained," says Bester, "and this can sometimes be costly as the body corporate is entitled to demand payment of the levy up to the end of the current financial year. "
The bond or registration attorney requests the Deed of Transfer to get the details of the sale such as the price and the date. The registration documents are drawn up and signed and then forwarded to the transferring attorney for lodgement.
Once all the documents have been signed by both parties, they are lodged simultaneously. The deeds office must approve the documents, which usually takes a week or two and can involve changes that need to be made, but once approved the buyer's bond is paid out by the bank and the property can be registered.
Bester says delays are a concern for both buyers and sellers. "If anyone fails to provide the required information, pay the deposit or outstanding rates and taxes, or to turn up and sign the transfer documents on time, this can cause a delay which could result in the payment of expensive and unbudgeted occupational interest," he says.
Occupational interest is payable by the occupant of the property to the owner. Sometimes the buyer takes occupation of the property before transfer, and pays occupational interest or rental to the seller who is still responsible for paying the existing bond.
However, it can work both ways, says Bester. "On rare occasions, the seller is still in the house after transfer has taken place, and then he is responsible for the payment of occupational interest to the buyer, who by then is the legal owner of the property."
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