Prior to the ownership of a property being transferred, both the buyer and seller have certain financial obligations that need to be addressed during a property transaction. It’s important to be financially ready and have a sound knowledge of what expenses either party is responsible for. Feel free to get in touch with us to discuss your upcoming property transaction and we’ll assist you every step of the way.
THE SELLER WILL BE LIABLE FOR THE FOLLOWING:
1. ESTATE AGENTS COMMISSION:
Should the Seller enlist the services of an estate agent to sell the property, then the seller will be required to pay the estate agent’s commission.
2. COMPLIANCE CERTIFICATES:
Electrical certificate of compliance; Plumbing Certificate (City of Cape Town only); Beetle certificate of compliance; Gas Certificate of Compliance (if applicable) ; Electric fence certificate of compliance (if applicable).
3. BOND CANCELLATION FEES:
If the property is bonded, the seller needs to pay a bond cancellation feedirectly to the bond cancellation attorney. This fee to cancel the bond is unavoidable, even if the bond reflects a nil balance. The seller is required to provide three months’ notice to cancel their bond with their Mortgagee Bank in writing; failure to comply, will result in a bond penalty interest equating to approximately one month’s bond repayment for every month of notice not given.
4. IMPOSTS AND OTHER COSTS
As a general rule, sellers will also need to pay a 60 days advance on their rates and services in addition to any arrears owing on any levies on their homeowner’s association fees. Other costs can include: Financial undertakings for the seller; bridging finance for the seller; obtaining a directive from SARS; or the repatriation of funds.
THE BUYER WILL BE LIABLE FOR THE FOLOWING:
1. OCCUPATIONAL RENTAL
Should the buyer take occupation of the property prior to the transfer from the seller, they are liable for paying occupational rent to the seller. This is however entirely dependent on the agreement between both parties;
2. BOND REGISTRATION FEES
If the buyer is registering a Mortgage bond, they will need to pay bond costs to the respective finance provider, which is in the form of an Initiation fee charged by the Bank. In addition, there will be Bond registration fees charged by the Bond Attorneys to register the Bond over the property.
3. TRANSFER DUTY AND TRANSFER FEES
Apart from Transfer fees to transfer the property into the buyer’s name, buyers are often required to pay transfer duty (on transactions over R1m) , which is a tax that the South African government levies on property transactions. Transfer duty is payable to the conveyancers prior to the transfer.
4. VAT (If applicable)
If purchasing from a developer, instead of paying transfer duty, a VAT portion will be paid. In some instances, transfer duty is not payable if the seller is VAT registered and the sale forms part of their enterprise; the property’s purchase price could either be recorded as VAT inclusive/exclusive in the contract depending on its terms.