CONVEYANCING FEES: WHAT ARE YOU PAYING FOR?
If you are a first time home buyer and new to the home buying process, you may not be familiar with the conveyancing process, which parties are involved and who pays the costs.
Conveyancing is the legal process whereby ownership of immovable South African property is transferred from one party to another.
The seller has the right to appoint a Conveyancer, of his choice, to attend to the transfer of his immovable property, although this, like other aspects of a Sale Agreement, can be varied by negotiation between the parties.
Conveyancing can be a complicated process and requires specialist knowledge and accuracy – particularly in less straightforward transactions that include things like subdivision or consolidation of properties, or the registration of servitudes.
Because of this, only an attorney who has undergone further qualification by passing the national conveyancing examination is allowed to perform these services.
A Conveyancer is therefore an admitted attorney who has passed a specialised conveyancing examination and has been admitted as a Conveyancer by the High Court of South Africa.
The first step in the sale of immovable property is the conclusion of a valid Agreement of Sale. Sellers and buyers would be well advised to instruct an experienced Conveyancer to review the Sale Agreement on their behalf, to ensure that it meets their specific requirements and to ensure that the said Agreement optimally provides for the protection of their interests.
The Sale Agreement is handed to the appointed Conveyancer, who will draft the necessary documents. Both the seller and the purchaser will be required to call at the offices of the Conveyancer to sign the necessary documents.
The costs relating to the transfer of fixed property will normally entail Transfer Duty or Value Added Tax. Transfer Duty is a form of tax payable, by the purchaser, to SARS and is calculated on the value of the property. Where the seller is registered as a Value Added Tax vendor in respect of the property, Value Added Tax will be payable in respect of the transfer of the property. If Value Added Tax is payable in respect of the transaction, no Transfer Duty will be payable. The amount of Transfer Duty which is payable is calculated according to a formula based on the value of the property. Transfer Duty normally constitutes the majority of the costs of the transaction.
Rates and levies must also be paid in full on date of transfer.
The Conveyancer’s fees are prescribed by a tariff and are calculated on a sliding scale based on the purchase price. The purchaser is normally liable for payment of these fees.
Where a bond is to be registered, the Conveyancer’s fees are prescribed by a tariff and are calculated on a sliding scale based on the amount of the bond and are normally payable by the purchaser.
If the seller has a bond registered over the property, the said bond must be cancelled on transfer, and the seller is responsible for payment of the Conveyancer’s fee for cancellation of the said bond.
Once the documents have been signed by the purchaser and the seller, and the transfer costs, transfer duty and rates and levies have been paid, the Conveyancer may proceed with the registration of transfer of the property, in the Deeds Office.
The above constitutes an outline of the normal conveyancing process. Other complexities, occasioned by subdivision and consolidation of properties and the registration of real rights may also arise. The sale of one property can often not take place until the purchaser has sold and transferred his property and so on. Conveyancing is in fact a complex process and requires extensive knowledge and accuracy on the part of the Conveyancer.
The period of time it will take to register a transfer depends on the co-operation of the parties and the extent to which they have complied with their contractual arrangements.
In view of the critical role which a Conveyancer plays within the conveyancing process it is recommended that sellers apply proper care when selecting a Conveyancer to attend to the transfer of their property.
At Goldberg & De Villiers the directors in our Property Law Department, namely Adri Ludorf, Tracey Watson-Gill and Bardine Hall and and a team of 8 highly skilled paralegals will gladly assist you with any of your Property Law related needs. Contact them on 041 501 9800.
