Transfer of Property Process & Costs
How long does transfer of property take?
The transfer of property process can take up to 3 months from the date of sale to the date that the property is registered in the buyer’s name.
Transfer of property process:
It’s of paramount importance that you as the prospective seller or buyer of a property completely understand how the transfer of property process works.
Since this process can be quite intimidating and complicated for first-time buyers and sellers, we’ve outlined the transfer of property process in a few simple steps to ensure that you know exactly what needs to be done each step of the way.
Step 1: OFFER AND ACCEPTANCE
First, you’ll need to sign a formal offer to purchase (OTP) document provided by the agent which will then be submitted to the seller. The seller will either accept your offer or propose a counteroffer.
Once both the buyer and seller have agreed and signed the OTP, the sales process begins.
Step 2: APPLYING FOR A BOND
When applying for a bond (home loan), the buyer has the option to go to their preferred financial institution OR they can use a bond originator (BO) – someone who will apply to all the financial institutions on behalf of the buyer, to secure the best deal possible. Once the application is approved the buyer must accept the approval by signing it.
The factors to consider when accepting a bond are:
- The bond amount (percentage of total purchase price)
- The interest rate offered
- The payback period
- Any other conditions stipulated
Once the bond has been accepted, the bank will appoint a bond attorney who will draw up all the necessary documentation that you, the buyer will need to sign.
Step 3: TRANSFER/CONVEYANCING ATTORNEY
The seller appoints a transferring attorney (TA), also known as a conveyancer, who will then do the following to get the deal over the line:
- Request the FICA documentation from the buyer and the seller
- Prepare all the transfer documentation which will be signed by the buyer and the seller, which will include numerous FICA affidavits as well as a SARS transfer declaration.
- Prepare a power of attorney which will enable the TA to pass transfer of the property to the buyer on behalf of the seller.
- Obtain clearance certificates from the municipality to confirm that all the rates and taxes of the seller are up to date.
- Obtain levy clearance figures from the acting body corporate (if buying a sectional title property).
- Where applicable, the TA will request the seller to provide certain certifications of compliance such as electrical, gas, and electrical fence, fire, etc.
- Pay transfer duties to SARS and receive a transfer duty receipt from SARS.
FICA Requirements:
- Full name
- Date of birth
- Identity/passport number
- Nationality (foreign nationals only)
- Confirmation of marital status
- Confirmation of income tax reference numbers
Residential Address:
- Verification of residential address
- For a customer who co-habits/lives with another person and all of the verification documents reflect the other person’s details, proof of the relationship must be obtained.
Acceptable Documentation:
Formal Identity document or valid passport (not expired), marriage certificate, antenuptial contract, tax return certificate, a formal document reflecting the name and residential address of the customer (less than 3 months old) such as: a utility bill, a bank statement, a lease or rental agreement, a municipal rates and tax invoice, a telephone account.
Step 4: BOND ATTORNEY (BO)
The bond attorney (BO), who is appointed by the bank, will do the following: - Apply for the cancellation of the bond and receive the bond cancellation figures
- Prepare the bond documentation to be signed by the buyer
- Receive guarantees from the bank
- Receive consent from the bank to proceed with lodgement
Step 5: SUBMITTING FOR REGISTRATION
As soon as all the necessary documents are in place, the TA will submit them to the deeds office for registration.
Lodgement is the first step in the deeds office process. The documents lodged will be examined for accuracy and compliance. This period usually takes between 7 to 10 working days. Provided there are no queries raised, the documents will be returned to the TA to prepare for registration. The deal is now considered “On Prep”. The Prep phase is used by conveyancers to get final consent from banks to register the property.
The deal is usually held On Prep for a maximum of 5 working days.
FINALLY, the matter is “put forward” for registration. Everything is ready and the matter will be ready to register the following day! The deeds office examiner will permit registration only if all papers are in order and all regulations and or legislation's are complied with.
Key Handover
Transfer of property costs
It’s important to note that transfer costs only apply to properties that are worth more than R1.1 million.
While we’d love to give you a definite amount that your transfer will cost, we can’t. Your transfer cost will depend on a combination of the property’s purchase price, the transfer attorney’s fees, VAT, as well as the transfer duty required to be paid to SARS. It’ll also depend on the interest rate that you get. Depending on the credit score you have, different banks will give you a set interest rate, the prime interest rate for 2021 thus far is as low as 7%.
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For example If you plan on purchasing a property for R1.5 million (in 2021) by taking out a loan of R1.5 million, your transfer costs will be ± R51000 if you obtain an interest rate of 7%.