There are very few things as exciting, yet so nerve wrecking, than buying, or selling your first
property. Even though you will have an estate agent (in most cases) and a conveyancer
guiding you through the process, you need to be aware of possible “hidden” costs when you
budget for this huge step in your life. For this article the costs will be based on an example of
a freestanding house purchased or sold by an individual for residential purposes.
COSTS FOR THE PURCHASER’S ACCOUNT:
Once a purchaser makes an offer to purchase their dreamhouse, and the seller accepts this
offer, a conveyancing attorney will be appointed by the seller to register the property in the
name of the purchaser. The purchaser is responsible to pay the conveyancing attorney’s
transfer costs which is calculated in terms of the Conveyancing Guideline of Fees, published
by the Legal Practice Council. These fees are amended on a yearly basis and calculated on
a sliding scale based on the purchase price.
In addition to transfer costs the purchaser is also responsible to pay transfer duty to SARS,
which is a duty payable when acquiring immovable property. Transfer duty is calculated on
the value of immovable property and is payable by the buyer within six months of
acceptance of the offer to purchase. If transfer duty is not paid within six months after the
date of purchase, penalties will be payable by the purchaser to SARS. It is fairly common to
see a property being advertised: “no transfer duty payable” which is not to be confused with
transfer costs. In this scenario the seller would be registered for VAT for purposes of this
transaction and VAT will be payable by the seller instead of transfer duty by the purchaser (it
will always either be VAT or transfer duty payable to SARS). If no transfer duty is payable the
purchaser will still need to pay transfer costs to the conveyancing attorney.
In instances where the purchaser requires a mortgage to finance the property transaction,
they will apply to a bank for a loan and if granted, the bank will register a mortgage bond
over the property as security. The mortgage bond registration process is similar to the
transfer process. The bank will appoint a conveyancing attorney on their panel to attend to
the registration of the mortgage bond and the purchaser will be responsible to pay the bond
attorney’s registration cost (on the same scale as provided by the Legal Practice Council).
Further costs on the registration attorney and bond attorneys statement of account would be
deeds office fees, electronic document generation fees and fees for submitting certificates
etc., which fees are also for the account of the purchaser.
COSTS FOR THE SELLER’S ACCOUNT:
If an estate agent was the effective cause of the sale, the seller will be liable to pay the
estate agent’s commission, as agreed upon between the parties or per the mandate. If there
is a mortgage bond registered over the property passed by the seller, the outstanding
amount will also need to be settled by the seller. The mortgage bond will need to be
cancelled, and the seller is responsible to pay the bank panel attorney’s cancellation fee and
deeds office fee.
In terms of section 118 of the Municipal Systems Act (32/2000) the Registrar of Deeds may
not register a transaction without a rates clearance certificate confirming that all municipal
bills for the past two years have been settled. In order to obtain the rates clearance
certificate, rates and taxes need to be paid four months in advance in most instances. The
advance as well as any arrears on the account will be for the seller’s account. After
registration, the said advance will be proportionately refunded to the seller, as the municipal
rates and taxes becomes the purchaser’s responsibility from the date of registration of
property in their name.
The Seller will also need, on his/her account, to provide the purchaser with valid certificates
of compliance (Electrical-, gas-, and beetle certificates – if applicable). In most instances the
seller’s costs will reflect on his/her final account statement and the costs will be deducted
from the proceeds of the sale, if possible.
It is important to note that the costs mentioned herein are not necessarily all the costs
applicable and payable when purchasing or selling a property as some properties are
subject to other clearances like Homeowners Association consents, and/or body corporate
clearances, among other costs. It is therefore vital that you consult with your conveyancer
and estate agent regarding the process and costs involved when buying or selling
immoveable property.
Article by: LORANDI VAN DER MERWE (LLB) Conveyancer
For more information contact Lorandi at 044 6019900 or lorandi@rgprok.com.
www.rauchgertenbach.com .
