To whom do you pay the deposit?

This will depend on what your contract says. Your deposit can be paid either to the estate agency or the conveyancers appointed to handle the transfer. They both have trust accounts where your money is protected. Please ensure you receive the appropriate receipts. Don’t pay your deposit directly to the seller or to an estate agent.

Who gets the interest on the deposit?

Unless otherwise agreed, the interest is paid to you after registration of transfer. On your written authority, both your estate agent and conveyancer can arrange for it to be invested in an interest-bearing account, and will act in your interest by placing it in the best short-term investment available.

To whom do you pay the occupational rental?

Your occupational rent goes to the estate agent or the conveyancer. They will usually pay it into the seller’s bond account or directly to the seller, if he has paid off enough of his bond account. You could pay it directly into the seller’s bond account if so agreed, but you may be required to provide proof of payment each month.

When will you have to sign transfer documents?

This may only be a few weeks after the sale agreement is signed. Usually your conveyancer will wait until the bond is granted and they have received the cancellation figures for the seller’s existing bond. Only then can the guarantee authority forms be completed and signed. You can phone the conveyancer for an update at any time.

How long will the transfer take to register?

This depends on the circumstances and due dates for the bond grant, and on the guarantees stipulated in the deed of sale. The average for most sales is about three months from the date of sale. When there are no complications, registration can be effected within two months. In cases where there are complications, registration can be delayed. In such cases, you will need to stay in touch with your conveyancer.

When buying in an off plan development transfer will depend on the completion date.

What will my transfer and bond costs be?

Your estate agent and attorney should be able to answer this question based on a schedule of transfer and bond costs. The actual transfer fees depend on the purchase price of the property. Bond costs depend on the total loan registered – and whether you are buying in your own name or in a trust, close corporation or company. Your attorney will provide your exact costs.

Cost table

When must my transfer costs be paid?

This usually happens a few weeks after the sale, when you sign your documents. Your conveyancer will require payment, since he has to pay the transfer duty – the major charge on most transfers – in advance, as well as the rates or levies due to obtain a clearance certificate. Don’t delay making a payment – it will unnecessarily delay the transfer.

Who will register the mortgage bond?

The bank will have a local panel of conveyancers for bonds, and one of these will be instructed to register your bond. If the transfer conveyancer is one of those on the panel, he will probably do the bond registration as well. The bond costs will be the same, though your transfer may go through faster if the same conveyancer does both.

Who will contact me on registration?

Your conveyancer’s secretary should contact you on registration to advise you. You will also be given a final statement of the account. Your estate agent may also phone you to confirm registration. The bank will send you a letter advising you of the registration of your bond, and the date when your first installment is payable.
Where will you get the keys to the property?

It is best to make an arrangement with your estate agent to pick up the keys from them on the agreed day of occupation.
Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

The idea of buying property off-plan is sensational, since the potential to have considerable input into the internal layout and finishing of your dream home is exciting.

Few have the finances or know-how to take on the challenge of changing an existing property’s internal walls, bathrooms, bedrooms or kitchen. Being able to custom design your own property without having to pay for an architect is definitely an advantage.

That’s the good part. The bad part is that there are many downsides  to procuring property based on an architect’s plans.

One of the most obvious is that purchasers cannot inspect what they are buying. People seldom purchase a car without having inspected it or taken it for a test drive; yet many are happy to purchase property off plan without ever having seen more than a picture or an architect’s plan.

An artist’s impression of what a development is meant to look like is not necessarily what a purchaser agrees to in the draft building plans and specifications. As buying property is one of the most expensive purchases individuals make during their lifetime, investing capital into something that has never been seen is highly risky.

A less obvious, but extremely important downside is the falsely perceived cost savings. The “package deal” that many purchasers believe they are receiving is not really saving the purchaser any money.

It is not uncommon to see slapped on development billboards “no transfer duty”, “no transfer costs” and “no bond costs”. What most purchasers don’t know is that these costs are assimilated into the purchase price in one way or another.

Where the seller of a property is a VAT vendor and the property is part of a vatable enterprise, no transfer duty will ever be payable by a purchaser. Instead, VAT is payable by the seller. In the case of a development where the developer is a company and a VAT vendor, the seller will always be liable for VAT. This cost is built into the purchase price of the property, along with all other costs, such as bond and transfer costs.

The problem with the advertised “package deal” is that the property’s value is less than what a potential purchaser may believe. Be well aware that the real value of the property is the net cost – a the total cost of the property less the transfer and bond costs and the VAT associated with those costs.

A further potential problem is the financial standing of the developer. It is vital that prior to signing any sale agreement, a potential purchaser investigates the developer. It is not unheard of for a developer to run out of funds part way through a development. This, in turn, can create various problems for a purchaser whose land has not been developed to completion.

If, for example, the developer runs out of funds, the development will come to a grinding halt, resulting in long delays. The longer the delay, the more chance there is for the overall costs to escalate. These, in turn, can be transferred to the purchaser unless a watertight agreement has been drafted; one specifically tailored to identify these problems.

The process is further delayed if the purchaser is purchasing a unit in a sectional title development. Normally, transfer of a sectional title unit will only take place when the final phase of that particular building has been completed.

When buying off plan it is therefore imperative that a purchaser is familiar with the process.

Should a purchaser require a bank to assist with the finance, it is important to realise that the repayment of (or at least part of) the mortgage bond and the rates and taxes (which are higher on vacant land than on developed land) will be payable upon the undeveloped land being transferred to the purchaser.

This means that a purchaser will have bond repayments before the construction of the house has even commenced. Accordingly, there is nothing to protect the purchaser if there are delays in the development.

If the development has not been built to specification of the approved building plans, no occupation certificate will be given by the local authority. Until such time that the house has been repaired or, in extreme cases, plans are amended and re-approved by the local authority and attended to by the developer, the purchaser should not occupy the property.

Ultimately, most of these problems arise either because the purchaser is unfamiliar with the process of buying off plan or because insufficient research was conducted into the developer and the development itself.

Once the purchaser has attended to the above, it is vital that various protections are in place in the sale agreement to protect the buyer in the event of long delays or a breach by the seller and/or developer.

Although there are numerous problems (only some of which are mentioned above) associated with buying off plan, there are many great developers and successful developments in South Africa. If a purchaser has done his homework and the right protections are in place, a purchaser is likely to avoid most of the difficulties associated with buying off plan and take pleasure in having a custom designed home.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za