Property and Conveyancing

Where a mortgage bond is lost and it is required to be cancelled the bondholder must similarly apply to cancel the bond.

A recent amendment to Regulation 68 of the Deeds Registries Act potentially has important implications for owners of property. A registered owner who has lost his title deed now has to advertise his intention to apply for a Regulation 68(1) copy of a Deed of Transfer (or to apply for the cancellation of a lost bond in terms of Regulation 68(11)). This advertisement has to run on two consecutive days in a newspaper in the area where the property held under the title deed, or mortgaged under the bond, is situated.

All persons who have an objection to the issuing of such a copy or to the cancellation of such a bond are required to lodge their objection in writing with the Registrar of Deeds at Cape Town within three weeks after the date of the first publication of the notice. The documentation, which will affect the transfer of the property and the cancellation of the bond, cannot be lodged at the deeds office until 21 days (three weeks) have elapsed after first publication of the advertisement. Therefore, the registration process is slowed down by a further 21 days.

This amendment was published in Government Gazette no 25370 of 29 August 2003 and comes into effect one month after publication.

As there will inevitably now be delays before the Deeds Office will issue a copy of a lost title deed, we would strongly suggest that you check whether you know where your title deeds are. If the property is mortgaged the document will more than likely be retained by the bondholder. However, if there is no bond over the property, the seller should be alerted to commence trying to trace his title deed as soon as possible.

There will in addition be cost implications, which are as follows:
1 It will cost approximately R850.66 to publish the relevant form in the Argus for two consecutive days. The form needs to be faxed a minimum of two days prior to publication.
2 Deeds Office costs for the copy amount to R225.00
3 The conveyancing fees will amount to R500.00 (inclusive of VAT).


Proof of publication will have to be lodged at the Deeds Office with the application for issuing of the certified copy.

Steps in buying and selling a property - The Deed of Sale

Why in writing?

All Deeds of Sale relating to the sale of land must be in writing and signed by both parties or their agents (acting on their written authority) in order to be legally binding. The Alienation of Land Act no 68 of 1981 determines this.

It is clear that if this contract is in writing, it prevents later problems with regard to proving the terms of the contract and also prevents the parties from committing fraud with regard to the contract. As buying and selling a property is such a big step involving such high costs, one cannot simply leave the terms of it up to the parties’ (selective?) memory.

Who signs?

Both the buyer and the seller must sign the Deed of Sale. Agents may sign on behalf of the parties, if they have written authorisation to do so.

If the buyer or the seller is married in community of property, it is also necessary that their spouses sign the Deed of Sale.

It is also important to note that the buyer does not become the owner of the property upon signing the Deed of Sale. Section 16 of the Deeds Registries Act determines that one can only become the owner of property once the Registrar of Deeds has signed a Deed of Transfer.

The effect of the buyer’s marriage regime on their ownership rights to the property (in community and out of community of property)

Being married in community of property will have the effect of both the buyer and his/her spouse becoming joint owners of the property. This entails that both spouses are the owners of one half of the property. However, it is an undivided share, meaning that one cannot draw a line down the middle of the property and say that this half belongs to him and the other half to her.

Sectional Schemes – s25 right of extension and the voidness of the contract

If one buys a unit in a sectional scheme, the Sectional Titles Act determines that the Deed of Sale should state whether the Developer of the sectional scheme or the Body Corporate has a right to extend the sectional scheme.

If such a right to extension is registered but not declared to the buyer in the Deed of Sale, then the buyer is entitled to cancel the Deed of Sale without any negative consequences for him. In the alternative, the buyer can decide to continue with the Deed of Sale as it stands. This decision of the buyer must also be recorded in writing.

Section 29A cooling off period

In terms of section 29A of the Alienation of Land Act certain buyers of property have a (limited) right to “undo” the signing of the Deed of Sale.

This is to protect certain buyers from being unduly influenced to buy a property.

This right is generally referred to as the “cooling off period” and is only applicable in cases where the purchase price is R250 000.00 or less. The buyer has five days, from the date on which he signed the deed of sale, to cancel the contract by informing the seller of his intention in writing.

All monies paid by the purchaser, must be paid back to him within 10 days of the seller receiving the written notice of cancellation from the purchaser.

The purchaser cannot be penalised for exercising his right to cancel the contract and he can also not waive this right. Even if the Deed of Sale determines that he has waived his right, this will not be a valid term of the contract

Buying and selling - Bond documentation

The purchaser may decide to obtain a bond in order to finance his purchase of the property. In these instances it will be necessary for the purchaser to go to the financial institution of his choice and to inform the institution accordingly. The financial institution will then do the necessary research to determine whether it is viable to lend the purchaser the amount of money he is applying for.

If the financial institution agrees to lend the stated sum to the purchaser, it will instruct its attorneys accordingly. The attorneys will start to draft the necessary documentation and contact the purchaser to come and sign the documents once the documents are drafted.

Sometimes the financial institution may require the purchaser to take out a life insurance policy. The life insurance policy will then pay out to the financial institution upon the death of the purchaser and thus ensure that the bond is fully paid up upon the death of the purchaser.

This is especially used in circumstances where the husband is the sole breadwinner of the family. Should he die, and there be no life insurance policy on his life, his family will run the risk of being evicted from their home, as they will not be in a position to repay the bond. A life insurance policy will thus prevent the family from losing their home.

The drafted bond document, together with the power of attorney, will be lodged with the transfer documents at the Deeds Office. The bond documents will be registered simultaneously with the transfer documents, meaning that the money in terms of the bond will become available upon registration

 Buying and selling - Cancellation of existing bond

If the seller of the property has a bond registered over the property in his name, it becomes necessary to cancel this existing bond before transfer can be passed to the purchaser.

The financial institution in whose favour the bond is registered will instruct their attorneys to cancel the bond. They will also forward the existing bond document, together with the seller’s title deed to their attorneys. The attorneys will then draw up the consent to cancellation of the bond, which cancellation they are entitled to sign on behalf of the financial institution.

This consent to cancellation of the bond and the bond document will then be lodged at the Deeds Office together with the new deed of transfer (transferring the property from the seller to the purchaser) and the purchaser’s bond documentation.

Upon registration taking place, the financial institution (at which the purchaser is obtaining his new bond) will pay out to the financial institution (at which the seller had his bond) the balance outstanding on the seller’s bond. Any money left over will be paid over to the seller

Buying and selling - Transfer duty

Transfer duty is a special kind of tax levied by the Receiver of Revenue when a property is being bought. Transfer duty is thus payable by the purchaser of property to the Receiver of Revenue.

Natural persons (i.e. not companies, close corporations or trusts) pay transfer duty as follows:

 

• No transfer duty is payable if the purchase price of the property is below R150 000.00
• 5% transfer duty is payable on the purchase price if the purchase price is between R150 000.00 and R320 000.00
• 8% transfer duty is payable on the purchase price if the purchase price is above R320 000.00

Companies, Trusts and Close Corporations will pay 10% transfer duty on the purchase price irrespective of the amount of the purchase price