You have finally found your forever home or perfect investment property, put pen to paper and signed your Offer to Purchase. Over and above the purchase price, the next question for any Purchaser is: “What am I responsible for paying for?”
In South Africa, it is the Seller who gets to nominate and appoint the Conveyancing Attorneys, and the Purchaser pays the costs of transfer, however, there are certain costs which the Seller is responsible for.
Costs which the Seller is responsible for:
• Rates and services
The Seller pays for any arrear amounts, the current amounts owing and a 60-day advance collection amount; any credit remaining on date of transfer gets refunded to the Seller.
• Levy amounts owing to the Body Corporate or Homeowners’ Association
In order to issue a consent to transfer, the Body Corporate or Homeowners’ Association require all arrear, current and an advance levy to be paid.
• Estate agents’ commission
The amount of commission payable is negotiated between the Seller and the Agent, and this amount is based on a percentage of the purchase price.
• Compliance certificates
The Seller is required to provide the Purchaser with certificates of compliance which cannot be older than two years and must be issued by a registered contractor. These costs usually include the fees for inspection and then any repairs that will need to be done in order to ensure the property is compliant. These certificates are the electrical, plumbing, beetle (if applicable), gas (if applicable) and electric fence (if applicable).
• Bond cancellation fee
If the property is bonded, the bond will need to be placed under cancellation. This fee will be applicable, even if the bond has a nil balance.
• Copy of lost title deed (VA copy)
If the Seller has misplaced the original title deed, a Deeds Office copy (VA copy) will need to be obtained and lodged with the transfer.
Costs which the Purchaser is responsible for:
The deposit is the initial payment the Purchaser makes to secure the property. Putting down a deposit is a good way to assist the process of qualifying for a home loan; it is very difficult to qualify for a 100% bond. This amount is payable to the transferring attorneys or to the agent’s trust account, which is held in an interest-bearing account; the interest accrued will be for the benefit of the Purchaser.
• Transfer duty
Transfer duty is the tax levied on the value of any property, which is payable to the South African Revenue Service (SARS). If the Seller is VAT registered and the sale forms part of the Sellers VATable enterprise, then VAT will be payable by the Seller and transfer duty will not be applicable. This amount is determined by SARS, based on the purchase price or municipal value of the property (whichever is the higher amount).
• Conveyancing fees and transfer costs
The transferring attorneys are responsible for transferring the property from the Seller to the Purchaser, and the fees charged on there are charged according to a tariff guideline. These fees will include the costs of disbursements, such as postage and petties and other fees.
• Bond costs
In order to register a bond in your name and against the title deed of the property, bond attorneys will be nominated by the respective bank and there will be fees applicable to the registration of the bond.
• Occupational rent
Should the property be vacant, and the Purchaser wishes to take occupation prior to the registration of transfer, occupational rental will be payable. This amount is usually determined in the Offer to Purchase or can be agreed upon between the parties prior to taking occupation.
Whether you are a first-time home buyer or purchasing your next home, there can be unexpected costs involved. Click here to get an idea of the transfer and bond registration fees.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).