You have signed the contract, now what?
Buying a new house is an exciting milestone, but before you can contentedly settle in, there are a number of administrative factors that need to be put in order and processed so that the property can be transferred to you and there are no hitches down the line.
What happens next?
“The first step is to ensure that the house is transferred to you. The transfer attorneys receive the signed offer to purchase contract. They do a deed search, open a file and send letters to the parties involved. It is up to the transfer attorneys to ensure that all the paperwork is in order,” explains Craig Hutchison, CEO of Engel & Völkers Southern Africa.
What is a Deed or Title Deed?
The Title Deed is a document that states that you are the legal owner of a property in South Africa. As proof that you own the property, the Title Deed needs to be transferred into your name. The document acts as proof of ownership in terms of the Deeds Registries Act 47 of 1937, and every property is required to have its own deed. The document contains important information about the property including size, description and selling price.
In order for a transfer of property to take place, a Municipal Clearance Certificate for Rates and Taxes as well as for Water and Lights is required. Without a Municipal Clearance Certificate the Deeds Office won’t proceed for transfer. The certificate proves that all Rates and Taxes as well as Water and Lights on the property have been paid up to date. Furthermore, because transfer of property can take a few months, the seller is obliged to pay four to five months of rates in order for the certificate to be issued.
It is a good idea for the buyer and the seller to meet at the property to do a reading of the Water and Lights meters on the date of transfer so that everyone is on the same page and there are no surprises when the statement arrives.
It is also the duty of the transfer attorneys to have various other certificates available for the buyer, including a certificate of alarm if the property has an alarm and an electricity compliance certificate as well as a gas compliance certificate if the house uses gas. These are for the home buyer’s peace of mind and are not necessary for acquiring a Municipal Clearance Certificate.
Bond application and approval
“For many individuals, part of the process of becoming a homeowner is applying for a bond and having the bond application approved. The bank requires information on you, the applicant, as well as the property. They also need to see the offer to purchase. They may send someone to do a valuation on the property, depending on what percentage of the price the buyer is applying for. Both the buyer and the property are analysed and qualified before a bond is issued,” explains Hutchison.
The transfer attorneys communicate with the bank’s attorneys with regards to various other documentation required in this application process. It is interesting to note that the bond registration will appear on the Title Deed and the bank keeps the original Title Deed document; while the owner receives a copy.
Once there are guarantees from the bond approver, these are sent to the cancellation attorneys of the present bond holders. Cancellation attorneys send this to the financial institution for approval of cancellation. The financial institution signs and returns to cancellation attorneys. They then confirm that they are ready to lodge and organize with bond and transfer attorneys for lodgment at the Deeds Office.
Once new ownership has been lodged at the Deeds Office, the seller moves out the house so that the new owners can move in and take occupation. The owner waits to receive the Title Deed from the Deeds Office. The Title Deed and Bond Act are then sent to the applicable parties. Taxes are finalized and there is acknowledgement of receipt of document from the relevant parties.
“As much as buying property is a significant occasion, the administration involved can be stressful. For the process to be as smooth as possible it is advisable to purchase from a reputable and professional estate agency that provides advice and assistance throughout the process, from the moment you decide to buy a property right up to the moment you take transfer,” concludes Hutchison.