This is a period in your life when you might have to pay the fees of more attorneys than some people will ever deal with in a lifetime. It can be daunting.
The bank agrees to give you a home loan. Then once you get approved for the bond amount you’ve asked for, suddenly there are all these lawyers’ invoices to pay. Who are they and why are there so many of them?
Three attorneys specialising in real estate law and property transfers and registration speak to Drum and explain it all.
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According to property law and conveyancing consultant Ephraim Gumbo, “The date on which the last signing party accepts the offer to purchase by signing the offer-to-purchase agreement, is the sale date of the property.”
After this agreement has been signed, the seller then appoints conveyancers to attend to the property transfer says the Consultant at Bordeaux, Randburg-based firm KWP Attorneys. One of the conveyancers initial obligations is to ensure that the payment of the purchase price is done as specified in the written agreement. In most instances payment is made in two parts, first, payment of a specified deposit on or before a set date, second, through a mortgage bond.
It is important to note that, most sale agreements are subject to a suspensive condition. In terms of this suspensive condition, a purchaser undertakes to secure a home loan within a time period set in the agreement. Therefore, until the purchaser secures the home loan, the agreement is suspended.
“If it so happens that you fail to secure the financing within the number of days specified in the suspensive condition clause, the agreement lapses.”
This means the purchase agreement becomes null and void, therefore it will not be enforceable. However, if you obtain approval of the home loan, then the contract becomes valid and operational. This is when the process of transfer and registration of the property commences and the other attorneys get involved.
Who are they?
“The bond cancellation attorney, the transfer attorney or lawyer and the bond registration attorney or lawyer – they are all conveyancers,” says Giuseppina Amore, a conveyancer and notary at Myers Attorneys in Silvamonte, Johannesburg East.
“The conveyancer is an attorney. First you qualify as an attorney, and then you study and you write another exam and you get admitted as a conveyancer. The conveyancer is the only person allowed to deal with immovable property in the deeds office.”
Giuseppina outlines the different types of conveyancing attorneys’ roles:
- There’s the ones that do the bond cancellation for the existing bond on the property;
- There’s the one who deal with the transfer of the property from the seller to the buyer; and then
- There’s the bond registration attorney who registers the new bond.
“The same conveyancer can actually do all three,” she says. Let’s take a closer look at what each of these attorneys are for.
The transferring conveyancer/transfer attorney
These are different names for the same type of conveyancer. “Once your bond amount has been approved, you as the buyer are going to notify the seller of the property that you intend to purchase,” explains Asive Fipaza, director of BA Libala & Fipaza Attorneys in Lenasia, Johannesburg South.
“Thereafter the seller himself or herself is going to appoint a transferring conveyancer who will then handle the transfer.”
The transferring conveyancer acts in the seller’s interest but has a duty to look after both parties' interests. “What usually happens is the seller appoints this attorney, but if they allow the buyer to appoint the attorney, that’s also fine. The estate agent, however, does not have the authority to appoint a transfer attorney,” Giuseppina says.
“When you are a buyer, you have no right at all to decided that ‘I want this attorney to do my bond’, or ‘I want this attorney to do the transfer. The bank has a panel of attorneys within its companies, so they follow procurement processes to appoint a specific law firm,” says Asive whose firm handles property transfers and bond cancellations and registrations for some of the Big Four.
“The seller is the only person who has a right to appoint an attorney, which is the transferring attorney/transferring conveyancer. The seller elects this attorney, most of the time with the assistance of the estate agent.
”If you are making a cash purchase of the house, there is a little more room for negotiation as the buyer,” the University of Johannesburg (UJ) Law PhD candidate explains. “You could say, ‘Can we agree to use this specific conveyancer?’ If the seller is happy with that idea, the you guys can go for it. But the decision lies with the seller.”
The bond cancellation conveyancer/attorney or bond conveyancer
This attorney is appointed by the bank and acts in its interests because a property that is still under mortgage technically still belongs to the bank. They are in possession of the title deed as security for payment of the home loan. So if you are selling or buying a house that hasn’t been paid off, an attorney has to cancel the seller's bond. You cannot appoint your own lawyer to do this.
“Once the the suspensive condition has been met, the conveyancer, KWP Attorneys, for example, approach the bank and confirm their instructions to attend to the transfer and request the bank’s transfer figures (the amounts still owing on the bond) and a copy of the title deed’ since the bank holds the original copy," says Ephraim.
"The bank will then release a copy of the title deed, furnish the cancellation figures to their attorneys known as the bond cancellation attorneys to attend to the cancellation of the seller’s bond.
"These attorneys will confirm the cancellation figures; advise how and when such amounts have to be paid; request that certain specified terms and documents be complied with and provided before cancellation of the existing bond and they also advise their fees which have to be paid prior to cancellation of the bond.”
The seller pays the fees for bond cancellation attorneys.
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The bond registration attorney/bond conveyancer
The bond then has to be registered on the buyer’s side, which is where these attorneys come into the picture. “The bond conveyancer strictly deals with the registration of the bond at the deeds office,” says Asive. “So that person works with the buyer or the person who applied for the home loan, while the transferring conveyancer deals with the seller.
“These are all conveyancers doing the same job but it all depends on the instruction – who is instructing you? Are you being instructed by the bank? That’s a bond attorney. Are you being instructed by the seller? That’s a transferring attorney? Are you selling you property that is still bonded? There needs to be a third attorney – the bond cancellation attorney.”
The seller is responsible for paying the bond cancellation costs. As the buyer, you will pay for the bond attorneys, postage and petties, the deeds office fee and a deeds search fee which is conducted by the bond attorney. You also pay the transfer attorneys' costs, including their deeds search fee, electronic facilitation costs, and then there’s transfer duty, which is paid to Sars for a property worth more than R1 000 000.
Here is an illustration of what a breakdown of your bond and transfer costs may look like:
- Purchase price: R1 100 000
- Home loan amount: R1 100 000
- Total bond and transfer costs: R65 486
Bond registration cost breakdown: R33 842
- Bond registration costs (incl. VAT): R24 621
- Bank initiation fee (incl. VAT)*: R6 037 (this varies, check with bond attorney)
- Deeds office levy***: R1 283
- Postage, petties and other application fees (incl. VAT): R1 900
Property transfer cost breakdown: R31 644
- Property transfer costs (incl. VAT): R24 621
- Deeds office levy***:R1 283
- Transfer duty**: R3 000
- Postage, petties and other application fees (incl. VAT): R2 740
Costs are effective as of May 2021
* This is a once-off fee charged by the banks to open a loan account. This fee applies to natural persons.
** This is a government tax on the transfer of property title.
*** Non-VATable.
Source: Property24.com. See disclaimer here.
