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10 Conveyancing terms you need to know as the property buyer/seller

Written by Design on . Posted in Conveyancing.

The transferring/conveying of property from a seller to a buyer can be a lengthy process that involves multiple people and lawyers. It is essential that the paperwork is done to the highest standard and that the property is properly from the seller’s ownership to the buyers. There is a lot of terminologies and specialised terms that real estate agents and lawyers will be very familiar with when transferring occurs. These terms might be completely foreign to the buyer/seller, and in this article, we would like to fix some of that. Read on to gain some insight into the terminology that can be used when your home is being transferred.

  1. Bond attorney

The bond attorney is one of the three main attorneys that will work to ensure the property is transferred properly. This attorney is responsible for getting the buyer’s bond registered after the home loan has been approved. The bond attorney is usually appointed by the bank providing the home loan. 

  • Bond originator

The bond originator is the person responsible for the new bond application. In other words, it is the buyer that now needs a bond.

  • Cancellation attorney

The cancellation attorney works with the bond attorney, but this individual is responsible for getting the seller’s existing bond cancelled at the bank. He/she is usually appointed by the bank that provided the seller with his/her bond.

  • Conveyancing

Conveyancing is the branch of the law that has to do with the preparation of all the documents to have a property transferred. Conveyancing attorneys have to be registered as such to be able to practice in this specialised area of the law.

  • Bond cancellation costs

The discharge cost is the charge involved in getting the sellers bond cancelled. Whenever a bond is transferred to a new bond provider, additional fees may be charged to be released from the bond early and the seller’s bond has to be settled before the property transfer can continue. 

  • Lodging attorney / Correspondent attorney

Towards the end of the transferring process, once all bonds are ready to be cancelled and/or approved, the transferring attorney will ready all the documentation that needs to be submitted to the Deeds Office. There is crucial documentation that needs to be submitted at the same time or the transfer cannot progress. If the transferring attorney is not in the vicinity of the Deeds Office, he/she can instruct a lodging office to complete this step. The lodging attorney will contact the bond and cancellation attorney to ensure the required documents are submitted at the same time.

  • Rates Clearance Certificate

This certificate is obtained from the municipality in which the property is located. It states that the current owner no longer owes any money on the municipal charges associated with the property. The transfer of the house cannot continue until this certificate has been obtained.

  • Transferring attorney

This attorney is primarily responsible for the transfer of the property. He/she must be a qualified conveyancer and they are usually appointed by the seller. The real estate agency/agent involved in the sale could also advise the seller of a reputable transfer attorney if the seller doesn’t know of one. The attorney oversees all the aspects of the process like administrative tasks, drafting transfer documents, communicating with all the parties involved, etc.

  • Transfer duty

The transfer duty is a cost above and beyond the agreed-to price of the property that needs to be paid to SARS when the property is transferred. The value of the house will determine the value of the transfer duty. This duty needs to be paid to SARS within 6 months of the sale date.

  1. Transfer fees

The transfer fees are also calculated above and beyond the price of the property, but it is payable to the transferring attorney for their services. The final amount is partially determined by the attorneys and partially by the Legal Practice Council’s guidelines as to fees payable to transferring and bond attorneys. 

The home buyer and/or seller doesn’t always need to know the intricacies of what it is the different attorneys are doing, but when they are familiar with these 10 terms, the transferring process can be much easier to understand.

A reputable conveyancing attorney, like those at AED attorneys, will be able to keep the buyer and/or seller fully informed and up to date on what is happening with the transfer of the property so they are never left in the dark or have unexpected expenses pop up.

AED Attorneys understands that every situation is unique, and although they strive to ensure that the information contained herein is accurate at the time of publishing, it cannot be guaranteed to be without errors or omissions. As a result, AED Attorneys, its employees, independent contractors, associates or third parties will under no circumstances accept liability or be held liable for any innocent or negligent actions or omissions in this article, which may result in any harm or liability flowing from the use of or the inability to use the information provided.

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What is the difference between transfer fees and transfer duty and when is each payable or not?

Written by Design on . Posted in Conveyancing.

Buying a house should be a marvellously wonderful experience. If it’s your first house, then it is likely the first big investment you are making towards your future and your excitement is running high. Beware, however, of the hidden and not so hidden costs that are involved with home purchases – things like spending money on moving, structural issues, levies, insurance, and bond fees. The two that are often confused are transfer fees/costs that always have to be paid and transfer duties that have to be paid sometimes.

Transfer duties

This is an additional cost above and beyond the price of the house that is payable to SARS when a property is transferred from one owner to another. The amount is calculated on either the purchase price of the property or the value of the property depending on which one is higher. The higher value will put you into a percentage band that will determine the final amount payable. From the 1st of March 2020, any property purchased at a value of R1 000 000 or less is exempt from paying transfer duties, hence the rate at which you pay this tax is 0%. For a property with a value of R1 380 000 for example, the transfer duty is R11 250 plus 6% of the value above R1 357 000. Below is a handy table of the transfer duty calculations:

Value of the property (R)Rate
1 – 1 000 0000%
1 000 001 – 1 375 0003% of the value above R1 000 000
1 375 001 – 1 925 000R11 250 + 6% of the value above R1 375 000
1 925 001 – 2 475 000R44 250 + 8% of the value above R1 925 000
2 475 001 – 11 000 000R88 250 + 11% of the value above R2 475 000
11 000 001 and aboveR1 026 000 + 13% of the value exceeding R11 000 000

If the property you purchase is subject to transfer duties, you are required to pay the calculated amount to SARS within 6 months of the sale date. If this is not done within the allotted time, you will be subject to penalties. The conveyancing attorneys will handle the payment, but this payment has nothing to do with their transfer fees.

Transfer fees

Unlike transfer duties, this is an additional cost above and beyond the price of the house, that always has to be paid to the attorneys handling the administrative tasks of the purchase. The total amount payable is also dependent on the value of the property and thus varies from purchase to purchase. The Legal Practice Council (formerly known as the Law Society) does provide a guideline as to the fees payable to the transferring and bond attorneys, but the disbursements (for example postage and petties, document generation fees, rate clearance costs) are at the discretion of the attorneys and may vary.

Bond fees are for the registration of a bond in your name (buyer). If the seller still had an active bond, then there will be a fee to cancel the bond.

It is important when selling or buying a home to involve attorneys that will transfer ownership efficiently and with transparency. AED Attorneys does just that as they ensure that a property is handled with care as quickly as possible. With their in-house conveyancing team and transparent dealings, your property is in the best hands possible.

AED Attorneys understands that every situation is unique, and although they strive to ensure that the information contained herein is accurate at the time of publishing, it cannot be guaranteed to be without errors or omissions. As a result, AED Attorneys, its employees, independent contractors, associates or third parties will under no circumstances accept liability or be held liable for any innocent or negligent actions or omissions in this article, which may result in any harm or liability flowing from the use of or the inability to use the information provided.

More About AED Attorneys