Author: Seeff, 07 February 2018, News
What should my Conveyancing Attorney be asking?
The legal stuff might seem a little daunting. Here is a helpful list of the questions which you and your conveyancing attorney will be considering.
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In terms of South African law it is the seller – not the agent or purchaser – who has the prerogative to nominate conveyancing attorneys of his/her choice to seal the deal and draw up the Offer to Purchase (OTP). It is vital that the OTP is thorough and accurate to avoid delays in transfer and adverse financial implications.
A ‘standard’ contract will probably need some additions or alterations to clauses to meet your specific needs. Many questions need to be considered when drafting the OTP, a few of which are listed below. Remember, once signed by both parties the OTP constitutes a binding agreement or Deed of Sale between buyer and seller.
Has all of the information been verified against the Title Deed?
All details of the property and any restrictive conditions need to be checked. Does the size of the property as described in the OTP correspond with the details on the Title Deed?
Are there any suspensive conditions or ‘subject to’ clauses?
Most OTPs include at least one suspensive condition, most common being subject to the buyer qualifying for a bond of a specified amount, or to the sale of the buyer’s current home, or both. These must be spelled out clearly and concisely with a cut-off date by when they must be met. If there is a property ‘chain’ and multiple property transfers need to happen simultaneously, it is crucial that all parties are clear on what they need to do, by when.
Are there other specific conditions – and how will they be dealt with?
Each condition needs to be spelled out, with clear statements on who is responsible for the costs. Any specialist reports (e.g. an engineer’s report to confirm that there are no structural defects) must be obtained speedily to prevent delays and uncertainties.
Once the buyer and seller have signed the OTP the seller cannot accept an offer from another buyer – unless the clauses and conditions are not met, in which case the offer becomes null and void.
Fixtures and fittings: What stays and what goes?
The OTP must record which fixtures are staying and which are not included in the sale. Anything that is not recorded has to stay, and the buyer can take legal action if additional items are removed.
Is the buyer paying a deposit?
While a 10% deposit is the general rule, putting down more shows good faith and commitment to the transaction, which strengthens the OTP (and its prospects of success). The amount must be specified, as well as by when it will be paid over.
Does the seller have copies of approved plans for the property?
Having plans drawn up and approved can cost a pretty penny – so if approved plans are not available, it is advisable to make it a condition of sale that they be provided by a certain date, together with an indication of who will bear the costs. If the property is sectional title, details of unit number, section number and additional sections (garages, parking bays, storage rooms) must be checked and confirmed.
Is an existing bond registered over the property?
Sellers must generally give at least three months’ notice to their financial institution that they intend to cancel the bond, if they wish to avoid penalties. The attorney can do this on your behalf.
How are the sellers married (if applicable)?
This question is vital in determining who must sign the agreement. Each marital scenario comes with different implications; for example, if married in community of property, a property will be registered in both names of the couple concerned and they both must sign the OTP.
Is the property being bought in another entity?
If the property is to be bought in a trust, close corporation or company, the conveyancing attorney will ensure that related rules and procedures are met.
What about buying from a deceased estate?
If the property if from a deceased estate, the Executor of the estate has to sign the relevant documents, which can be done once a Letter of Authority has been issued by the Master of the High Court. Here it is advisable to include a clause that the sale is subject to the approval of the Master of the High Court in terms of Section 42 (2) of the Administration of Deceased Estates Act.
Is there an issue around vacant occupation?
Should vacant occupation be specified, it must be indicated whether this will occur on transfer or on a specific date. The seller must deal with any tenants, giving notice timeously to ensure that the property is vacant before registration of transfer. If the OTP does not provide for vacant occupation any lease will survive the sale and the buyer will become a (possibly unwitting) landlord.
When does occupational rent apply?
Transfer usually takes about 12 weeks, so stating when you're going to take ownership has to be in the OTP. If the seller is going to have to continue to live in the property after that date of occupation, then occupational rent must be specified. This is usually quite high to cover all of the costs of ownership of the property.
Is the buyer covered by the Consumer Protection Act, or does the voetstoots clause apply?
If the seller of the property is a private seller and not an investor, speculator, trader, builder or developer, and is not dealing in property, the voetstoots clause could apply. It is always best to attach a full disclosure report in order to avoid any disagreements regarding the condition of the property later.
Have all blank spaces been filled in, and witnesses signed where needed?
Most banks now insist on witnesses to the OTP. Buyers and sellers must never sign a contract if there are any incomplete sections in the document.
Have any alterations or changes been made to the contract?
Any alterations need to be accepted by the other party in order to be valid. If an alteration is made after the first signatory has signed, it must be re-presented to them so they can confirm the change; until this is done it will be regarded as a counter-offer and not a valid Deed of Sale.
Who pays what?
Your attorney will be able to provide you with invaluable information such as a breakdown of who pays which costs, as well as a good estimate of these.