A Guide for Buyers and Sellers
Buying or selling a property is often one of the most significant financial decisions a person will make. While the process may appear as sign and move in or move out, several legal complexities and delays can arise along the way, but not to worry, our offices will help you avoid common pitfalls and ensure a smooth transaction:
• Verify Title Deeds and Ownership
Before signing and proceeding to buy a specific property, it’s crucial to confirm that the seller is the legitimate owner and that the title deed is free of any disputes or encumbrances that may delay the process, like lengthy deceased estate disputes or zoning and heritage rights.
• Avoid Paying the Seller Directly
A major mistake many buyers make is paying the seller directly before signing an Offer to Purchase (hereafter referred to as the OTP), to “secure” the deal. The OTP is crucial because it sets out the terms of the sale. Payment should only be made once the OTP is in place and to the trust account of the conveyancing attorneys, as this legally binds both parties. Paying without the signed agreement exposes the buyer to significant risks, such as fraud or the seller changing their mind. Payments should always go through the conveyancer, the attorney responsible for the property transfer, to ensure everything is handled properly and according to the agreed terms.
• Ensure Compliance with the Sale Agreement
A sale agreement must be in writing and meet all legal requirements. Failure to meet the terms of the agreement—whether in the description of the property, purchase price, or payment terms and special conditions like certain renovations—can lead to unnecessary delays or disputes.
• Delays in the Transfer of Ownership
Transfer delays are common, especially when there are unresolved financial obligations like unpaid municipal rates or taxes and electrical wiring or plumbing issues. Such delays can affect the buyer’s ability to take possession of the property and begin using it. Buyers should be aware of these potential issues before finalising the deal. (# immovable property condition report).
• Settling Municipal Rates and Taxes
Sellers must ensure that all outstanding municipal rates and taxes are cleared in terms of Section 118 of the Municipal Systems Act before the property transfer can occur. The conveyancing attorney must ensure this obligation is fulfilled. If not settled, these costs may become the buyer’s responsibility, or they could cause delays in the registration process. Buyers should always check that these payments are current before completing the transaction.
• Understand Zoning and Land-Use Regulations
Buyers should confirm that the property’s zoning and land-use status align with their plans. For instance, a residentially zoned property cannot be used for business purposes without proper authorisation from local authorities. Understanding zoning laws upfront can help avoid complications down the road.
• Building Compliance and Occupation Certificates
Sellers are required to provide an occupation certificate that confirms the property is habitable and complies with local building regulations, especially if the building have been erected in the previous 5 years. Buyers should also check for any unauthorised alterations or construction that may not have received proper municipal approval, as this could lead to penalties or forced removal of unauthorised structures.
• Understanding Transfer Costs and the Conveyancer’s Role
Conveyancers manage the legal aspects of transferring the property title. Both parties should fully understand the costs involved, such as transfer duties and registration fees. While buyers typically cover these costs, sellers need to ensure they’re not liable for expenses beyond their responsibility.
• Risks When Buying at Auction
Property purchases at auction involve unique risks. Buyers often must make payments immediately or settle the full amount within a brief period. It’s vital to thoroughly understand the auction terms and conduct extensive due diligence before committing to avoid potential legal problems.
• Tenant Rights and Lease Agreements
If the property is currently tenanted, sellers must ensure the lease agreements are clear and legally sound. Buyers should be aware of existing tenants and the legal rights attached to these agreements. Both parties must understand the implications of tenant eviction, lease termination, and any potential disputes over deposits.
• Beware of Fraud and Identity Theft
Fraudulent practices, such as forged documents or identity theft, pose a significant risk in property transactions. Buyers and sellers should work only with trusted real estate agents and legal professionals. Verifying all documentation, including identification and proof of ownership, is essential to prevent fraud.
• Compliance with the Property Practitioners Act
The Property Practitioners Act regulates the conduct of real estate professionals in South Africa. Buyers and sellers should ensure that their estate agents are licensed and compliant with the law to avoid working with unqualified or dishonest agents.
Engaging in property transactions in South Africa requires careful attention to detail and an understanding of the relevant legal procedures. Both buyers and sellers should seek professional legal advice to navigate the complexities of the process and mitigate potential risks. By consulting an experienced attorney, parties can avoid costly mistakes and ensure a smooth and successful property transfer.