1. Where can I get a simple guide to the process?
When you come down to the details, it certainly is important to get everything right, but a simple, broad overview to start with will go a long way to de-mystifying the process and to set you safely onto the right path.
Have a look at the Law Society of South Africa’s “Buying or Selling a House: What You Need to Know.” Download it in any of four languages here.
The guide is clearly written and full of important information and advice, both practical and legal – take the time to read it in depth!
Turning now to a few of the other more common questions you will no doubt have…
2. Do I really need legal advice?
The danger of not having legal advice is that many pitfalls await the unwary, and you will be held to anything you agree to. The sensible thing to do is take advice early – well before you appoint an agent, start looking for a house, or get involved in submitting offers and negotiating sale agreements.
Not having your “offer to purchase” or “agreement of sale” legally checked is a recipe for disaster. Once you sign on the dotted line, you are on the hook for everything in the document. With minimal exceptions, our law holds you to your signature, and it is no good saying later, “But I didn’t read the document, it all looked like the normal standard stuff” or “I had no idea I agreed to term x or condition y” – tough, you are bound.
Bottom line – chat to your attorney before you do anything else!
3. Whose name/s should I put the property in?
Should you buy the house in your name or your spouse’s name? Should you buy jointly? Does it matter what marital regime applies to your marriage? What if you are in a permanent cohabitation arrangement rather than a formal marriage? Or perhaps you wonder whether you should put the house into the name of a company or family trust.
Your choice now will have far-reaching legal, tax, and practical consequences, and with some complex areas of law involved, specialist upfront advice is a no-brainer.
4. What else should I ask my attorney?
Common areas of dispute and litigation include “bond clauses” and “72-hour clauses” in sale agreements, confusion over the need to identify or disclose both visible and invisible defects, disagreements over what is a “fixture” that comes with the house and what isn’t, misunderstandings over neighbours’ rights to build and encroach on views and the like, not checking for building plans and municipal Certificates of Occupancy (you will have a problem if a previous owner built or extended without proper plans), not checking the zoning and title deed restrictions (which could put a damper on any plans you have to extend, go up a storey, build a home office, or the like), servitudes or other rights of use over the property, limited “home business” options and so on.
(Tip: Take lots of “before and after” photos of the house and property with your cell phone – a dated picture is hard to argue with!)
Other “homework” items to ask about – what paperwork you will need (do you know where your title deed is?), how long your particular transfer is likely to take (and a linked question “what date of occupation should we agree on?”), to whom must deposits and any occupational rental be paid (and who gets paid the interest earned on monies held in trust), what compliance certificates you need, how to find the best bond rates, whether you might qualify for a FLISP (Finance Linked Individual Subsidy Program) subsidy, how to cancel and open municipal service accounts, the rights of any occupiers (not just tenants, also “unlawful occupiers”), and so on – you will have your own list.
5. What about planning my finances?
Ask your lawyer for a breakdown of who will pay what and when. Think deposits, bond and transfer costs, transfer duty, agent’s commission, bond settlement balances, and so on. Cash flow forecasting, and a clear understanding of the timelines involved, are critical here to avoid unpleasant surprises down the line.
As a buyer, factor into your “affordability budget” not only bond repayments and your projected regular monthly costs (rates, services, insurance premiums, security costs, etc.) but also an emergency fund to cover any unexpected costs that may crop up.
On the subject of finances, cyber-fraud is a growing issue in electronic communications and payments, so agree with your lawyer on measures to ensure that neither of you falls victim. Fraudulent “here are my new bank account details” emails are flavour of the month, but the scams are constantly evolving.
6. Should I buy-to-let in the current market?
Buying-to-let can be an excellent investment channel. For a whole host of reasons, this time of pandemic and disruption has opened up an abundance of opportunities to prospective landlords. Just don’t rush in blind – choose the right property in the right area, go into the process with your eyes fully open, and in particular, beware of the common pitfall of failing to minimise your risk of having to fight a difficult, destructive or non-paying tenant. Residential property occupiers enjoy strong protections against eviction even in normal times, and these protections are even stronger for the duration of the National State of Disaster.
It is also essential to understand the impact of the Rental Housing Act on the landlord/tenant relationship – do you know the specific requirements around rental deposits and joint property inspections? “Ignorance of the law” is no excuse, and non-compliance could cost you dearly.
7. Who appoints the conveyancer, and why do I need one?
In a nutshell, you need to appoint a specialist lawyer (a “conveyancer”) to pass the transfer of ownership from the seller to the buyer in the Deeds Office. That’s because only on registration of the transfer does the buyer become the property’s legal owner.
As a seller, insist on choosing the conveyancer – pick a firm you can trust to act with professionalism, integrity, and speed.
8. What about buying into a complex?
Owning a house and living in a community scheme comes with substantial benefits; understand exactly what you are letting yourself in for both on a practical level, and regarding the various rules and regulations you will agree to.
Our courts regularly have to sort out bitter (and unnecessary) disputes around owners desperately – and almost always unsuccessfully – trying to get out of complying with body corporate and Home Owners Association rules. Common complaint areas are home businesses, pet ownership and control, vehicle parking, noise, nuisance objections, and the like.
9. What records and paperwork should I keep?
One thing is certain – the document you don’t keep on file is the one you will be desperately searching for in 10 or 20 years! So when in doubt about a particular item, keep it, but at the very least have a file (backed up electronically) with –
- Your title deed (also called a “deed of transfer”) from the conveyancer. If your property is bonded, the bank will keep the original, in which event keep a copy plus a note as to which bank has the original. If you lose your title deed, you can get a copy, but there are delays and costs attached, which you really want to avoid when you come to sell again down the line.
- The full signed agreement of sale and annexures. The conveyancer’s final statement of account and associated invoices.
- All bank loan and bond documents.
- Your municipal Certificate of Occupancy if you undertake any building work (construction, renovations, extensions, etc.).
- A running list with supporting documents of all tax-relevant expenses. For example, keep a running Capital Gains Tax schedule with –
- A list of expenses is relevant to the house’s “base cost” (purchase price, transfer costs, legal fees, bond costs, agent’s commission, costs related to the sale or purchase like advertising, architect’s fees, etc.)
- Ongoing capital expenses, i.e., improvements and renovations (but not repairs or maintenance).
- “Before and after” photos of the house and property.
- Ask your lawyer if there is anything else you should keep relevant to your particular property and transfer.
Article courtesy of LawDotNews