Conveyancing Information

AGREEMENT OF SALE

The estate agent should assist you in completing the Agreement of Sale. The purchaser makes an offer to purchase the property in a document known as an Offer to Purchase. The offer is usually only open for acceptance until a specified date. If the seller accepts the offer by the said date then the Offer to Purchase becomes a binding contract between the seller and the purchaser. Should the seller sign the offer but alter it by adding or deleting clauses, this may constitute a rejection of the offer. The offer then becomes a Counter-Offer which will need to be accepted by the purchaser.

COMPLETING AN AGREEMENT OF SALE

The essential elements of the Agreement of Sale are:

  • The buyer and the seller
  • The purchase price
  • The property
  • A written agreement signed by the parties or their representatives

The following are guidelines to completing an Agreement of Sale (non-compliance may cause unnecessary disputes between the parties):

  • Write clearly and neatly in durable black ink
  • Delete all clauses not forming part of the agreement
  • Cross out all blank spaces
  • Ensure that all the parties initial at the bottom of every page and next to every deletion
  • Ensure that the agreement is witnessed. Witnesses should initial at the bottom of every page and next to every deletion

THE CONTENT OF AN AGREEMENT OF SALE

What follows is a brief explanation of some of the clauses that are usually found in a pre-printed Agreement of Sale.

Mortgage Bond
This clause is usually worded as a "suspensive condition". This means that if the clause is not fulfilled to the letter, then the agreement lapses or falls away. The clause usually states that if the purchaser fails to obtain a bank loan for a specified amount by a specified date, then the agreement lapses or falls away. It is very important to specify the amount of the loan required and the date by which the loan must be obtained. A purchaser should insist on the inclusion of this clause where he/she cannot afford to buy the property unless the said loan is obtained.

Fixtures
The sale of immovable property includes all fixtures of a permanent nature. As a purchaser, if you are uncertain as to whether or not a particular item forms part of the property and you would like it to do so, then specify this in the Offer to Purchase. An item which often causes problems is an alarm system as it may belong to the security company and not the seller. In this case it is important for the purchaser to either agree to the removal of the alarm system or to take over the existing contract with the security company.

"Voetstoots"
This clause means that the purchaser takes ownership of the property as is. It protects the seller from being sued by the purchaser for any claim arising out of patent or latent defects in the property. Patents defects are obvious defects which would be found upon a reasonable inspection of the property while latent defects are hidden defects.

Electrical wiring certificate
It is a legal requirement that a property may not be transferred into the name of the purchaser unless a valid electrical wiring certificate exists that is less than two years old. This clause usually states that the seller must provide a valid electrical wiring certificate. If the purchaser requires a new electrical wiring certificate then this must be stated in the Offer to Purchase.

Default clause
This clause becomes important if one of the parties does not comply with their obligations under the Agreement of Sale. In terms of this clause the innocent party may send a letter to the defaulting party demanding that he/she comply with the Agreement of Sale. Should the defaulting party not comply timeously, then the innocent party may choose to cancel the agreement and claim damages from the defaulting party.

Sale of the Purchaser's Property
This clause is usually worded as a "suspensive condition". This means that if the clause is not fulfilled to the letter then the agreement lapses or falls away. The clause usually states that if the purchaser does not sell a specified property for a specified amount by a specified date the agreement lapses or falls away. It is very important to specify a due date by which the purchase price must be provided. A purchaser should insist on the inclusion of this clause when he/she cannot afford to buy the property unless his/her own property is sold.

Offer by a third party or "RAT" clause
This clause allows the seller to continue marketing the property where the Agreement of Sale is subject to a suspensive condition. The object of this clause is to allow the seller to accept a better offer if the suspensive conditions set out in the Agreement of Sale have not been met. To exercise this right the seller must inform the purchaser of the better offer and require him/her to effectively delete the suspensive conditions by a specified date. Failing this the seller may accept the better offer. RAT clauses vary, but it is common for these clauses to define "better" offer.

Section 29A of the Alienation of Land Act
Where the purchase price is R250 000 or less, the purchaser has a statutory right to cancel the Agreement of Sale within five days subject to certain exceptions. The Agreement of Sale must inform the purchaser of this right, as well as how to exercise this right. Failing this the purchaser may not be forced to continue with the agreement should he/she choose not to.

Companies, Close Corporations and Trusts
Where the purchaser is a company, close corporation or trust it is advisable for the seller to insist that the person signing on behalf of such entity bind himself/herself as surety for the obligations of the entity. This will protect the seller if the purchaser fails to perform its obligations in terms of the Agreement of Sale.

Although a duly authorised representative may sign an Offer to Purchase on behalf of a company or close corporation that is to be formed, it is not possible for a representative to sign on behalf of a trust to be formed. Where a representative does sign on behalf of a company or close corporation to be formed, it is advisable to limit the time period allowed for such formation.

TRANSFER PROCESS

The transfer process starts with the Agreement of Sale being sent to an attorney who is a qualified conveyancer. The conveyancer will then attend to the process of changing ownership of the property from the seller to the purchaser.

On receipt of the Agreement of Sale a reliable conveyancer will perform numerous tasks to avoid unnecessary delays. The conveyancer will:

  • Contact the parties and request the information and documentation required to draft the transfer documents
  • Read through the Agreement of Sale, taking note of important dates and clauses, and address any issues that may affect the validity of the agreement
  • Search the Deeds Office database to check for potential problems with the property or the parties
  • Request a Rates Clearance figure from the municipality or Levy Clearance requirements from the body corporate
  • Request the bank to provide the bond cancellation requirements and the title deed if the property is mortgaged.
  • On receipt of all of the abovementioned information and documentation, and provided all the suspensive conditions have been met, the conveyancer will draft the transfer documents.
  • The conveyancer will also request payment of the transfer costs from the party responsible for such costs (usually the purchaser).

On signature of the transfer documents and payment of the transfer costs the conveyancer will pay the outstanding rates or levies and transfer duty owed.

The conveyancer will then wait for the rates clearance certificate or levy clearance certificate and transfer duty receipt. The conveyancer may also be waiting for guarantees from the bond attorneys to secure the purchase price. On receipt of the certificates, transfer duty receipt and guarantees, and provided there are no outstanding issues, the conveyancer will send the transfer documents to Cape Town for lodgement.

There may be three sets of documents for lodgement under the control of three sets of attorneys – one attending to the transfer, another attending to bond registration, and yet another attending to bond cancellation. All these documents must be lodged and registered simultaneously. An error in any of these documents will delay registration of transfer.

Upon lodgement the Deeds Office checks the documents for errors and for any reason why the transfer may not proceed. This process usually takes 10 working days but may take longer. Once the Deeds Office is satisfied that the transfer may proceed, the transfer "comes on prep" also known as "coming up for registration". At this stage, all the conveyancers check again that registration may proceed. If there are no problems, they will hand in their documents the next day and effect registration of transfer. The seller will normally be paid the following day.

The process usually takes approximately 8 weeks but there are numerous factors that may delay this process.

The most common of these are:

  • Delay in receiving the bond cancellation figures or the title deed
  • Delay in receiving the transfer duty receipt
  • Delay in receiving the rates clearance certificate or levy clearance certificate
  • Delay in the purchaser paying the purchase price or providing guarantees for same
  • Delay in the fulfilment of any suspensive conditions
  • The parties agreeing to delay registration of transfer
  • Either party not signing the transfer documentation when requested to
  • The purchaser not paying the transfer costs when requested to
  • A lost title deed
  • Delays in the Deeds Office

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