In the process to transfer the property from the name of the Purchaser to the name of the Seller, there are several steps that must be taken by the Conveyancer. You can read more about the complete process by following the links mentioned above, as it will not be again discussed in this particular article.
This article has relevance to the certificates that the Conveyancer must apply for that must be lodged with the documents that the Seller and the Purchaser signed. These documents, that are drafted by the Conveyancer for both the Seller and the Purchaser, are referred to as the transferring documents. The attorneys who cancel the Seller’s bond and the attorneys who register the Purchaser’s bond, will also have their documents drafted and signed by the Seller or the Purchaser, and we refer to these as the “bond documents”
A transfer duty receipt as well as a municipal clearance certificate, and if it is applicable, a body corporate certificate must also be obtained by the Conveyancer of the property that is sold.
(In our case, as soon as we get the instruction to transfer, we immediately apply for these certificates because it can take time).
The Municipal Clearance Certificate is a certificate that must be obtained from the local authority where the property that is sold is situated. The Municipality will calculate the rates and taxes, as well as the electricity and water 3 – 6 months in advance. The Seller must then pay this amount upfront so that the certificate can be issued. The Seller will be informed of this amount by the Conveyancer. As soon as this amount is paid, the Municipality will issue a clearance certificate. This certificate basically just confirms that all is in order with the property and that all outstanding rates have been paid. (Included in the word rates is electricity and water and rubbish removal as well, but the Conveyancer will probably ask you for “rates” only, so don’t be confused).
Since nobody is sure on which day exactly the transfer is going to take place, the certificate is calculated for 3 months (on average) in advance, because that is in general how long a transfer of property lately takes. On the day of transfer, the amount that was paid in advance by the Seller is adjusted, because if the transfer takes place within the 3 month period, the Seller needs to be refunded for the amount that he/she paid but that is not due by him/her due to the registration of transfer.
Sometimes things go wrong and the certificate is either lodged to late or the deed’s office takes too long and the certificate lapses. (It is only valid for 3 months) Then one has to apply for a new certificate.
SARS will never allow a property to be transferred unless the transfer duty has been paid. Whenever one sells property, there is a tax that must be paid upon the transfer. The cost works on a sliding scale which we are not discussing here. The Conveyancer will calculate the amount and send the Purchaser a statement. As soon as this amount is paid to the Conveyancer, it is paid over to SARS who will then issue a transfer duty receipt. (If the Seller is registered for VAT – the Seller won’t pay transfer duty but VAT and a VAT receipt will be issued and not a transfer duty receipt.)
Do read our other articles on the subject of property and property sales and transfers.
This article was written by Nanika Prinsloo of Prinsloo & Ass Attorneys and Conveyancers.
Contact us at cell: 072 8558 106