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Understanding the costs involved in buying or selling a property

All property come with associated costs. This is the natural outcome of ownership or sale. In this article we will explore the costs associated to all parties.

 

We will start with the Sellers costs. All sellers will incur costs in the sale of their property. A seller will see himself or herself face the following:

-Bond cancellation fees (if applicable):

This is a fee payable to your banks attorney for cancelling an existing bond on your property.

 

-Compliance reports:

This is mandatory and will include electrical compliance, entomology, and gas. There is a legal debate surrounding the issue of electrical fencing but that will be covered in a separate article.

 

-Rates clearance figures:

This is the amount that the municipality requires in order to render the property cleared of rates, electricity and water. Amounts are paid in advance and all amounts from date of transfer will fall to the purchaser who will refund the seller his pro-rata portion.

 

-Levy clearance figures (if sectional title):

As with rates clearances, the same principles apply to all sectional title properties. The managing agent or body corporate will provide us with amounts that the seller has to pay in order to render the levies cleared. This is mandatory. Amounts are paid in advance and all amounts from date of transfer will fall to the purchaser who will refund the seller his pro-rata portion.

 

These liability amounts can be changed by agreement, but remember that transfer duty will be calculated differently if the purchaser pays any amounts over and above the sale price. Transfer duty is paid on the total value of the consideration paid in acquiring the property but excludes the legal fees paid.

 

The Purchasers liability will include the following:

– Transfer Duty (payable to SARS):

All transactions attract transfer duty besides a few exceptions. Application must be made for a transfer duty receipt (above R750 000) or exemption (if below R750 000), regardless of whether transfer duty is payable or not.

 

– Transfer fee:

This is the tariffed conveyancing fee. This is the fee payable for the registration of the transfer.

 

– Lodging agent’s fee/vat/postages and petties:

The lodging agents are our correspondent attorneys based at different deeds registries. Their fee is for attendance to the registration at the deeds office and returning of the original title deed to us, and is paid to them.

 

– Deeds office fee:

The Deeds office is regulated and all conventional and sectional title lodgements attract a prescribed tariffed fee for registration of the transfer.

 

– Deeds office search:

This fee is the fee that our service providers charge us for a compulsory deeds office search. This is inclusive of obtaining a copy of the deed in order to begin immediate drafting. The search enables conveyancers to note caveats, endorsements, restrictions, servitudes, bonds etc. registered against the property.

 

-Postages and petties:

This is our fee inclusive of all costs incurred in travelling, telephone calls, postages, bank charges etc. in handling the matter.

 

– Electronic document generation fee:

This is charged by our service provider for the transfer and use of the system.

 

– Rates clearance application / certificate:

This is paid over to our electronic service providers for use of the electronic rates service. All municipalities are moving towards electronic requests for rates. This not only speeds up the process but alleviates municipalities handling and misplacing physical documents. Preference is given to all electronic requests.

 

– Transfer duty application:

This is paid over to our electronic service providers. The application entails all the details of the transaction in order for SARS to verify the transaction and establish the amount of duty payable. Once paid, a transfer duty receipt or exception certificate is issued which must accompany the registration as proof of fulfilment of obligations in terms of tax.

 

– FICA:

This is a fee for compliance with the financial intelligence centre regarding all property transactions.

 

– Levy clearance certificates:

For all sectional title transfers, a levy clearance certificate must be issued by the managing agent or body corporate reflecting that the levies due have been paid in full. The fee for the certificate is payable directly to the managing agents and varies. This cost will be added onto the bill once we are notified of the fee. This is paid over to the agency concerned.

 

-Bond registration fee:

If the purchaser is being financed by a bank then a bond will be registered over the property in favour of the bank. The bank will appoint a conveyancer to register the bond and the purchaser will be liable for the bond registration fee, and in certain circumstances, an initiation fee.

 

For expert advice drop us an email and one of our staff members will get back to you. Understanding the financial side of property will enable you to better prepare yourself and ensure that the purchase or sale of your property goes smoothly.

 

Contact Us

102 Aldrovande Palace 6 Jubilee Grove Umhlanga Ridge (Entrance on Millennium Boulevard)

0315663563

info@sibranlaw.co.za

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