The costs and steps involved in transferring the title of a property

Perhaps you’re selling your family home, or maybe you’re looking for a house to make your home. In either case, you need to understand the ins and outs of transferring the title of a property.

We have a look at the eight steps you should anticipate when selling or buying a home, and we consider the different costs involved for buyer and seller.

Tip: You need a great credit score to qualify for a home loan. Find out what yours is today.

Steps to transferring the title of a house

According to Ardene Nel, attorney at Hammond Pole Attorneys, there are eight steps to transferring the title of your house to the new owner.

1. Signing an offer to purchase

This is a document that confirms the buyer’s intention to purchase the seller’s property. The offer to purchase sets out the terms and conditions of the sale of the property. The transfer process can start as soon as the offer to purchase has been signed and accepted by both the buyer and the seller.

2. Securing finance for the purchase of the property

Once the offer to purchase has been signed, the agreement will set out exactly how the buyer will be required to secure the full purchase price. The purchase price can either be secured by way of a cash payment, or by obtaining a bond from a financial institution – or a combination of both.

3. Obtaining relevant documentation

Various documents are required during the transfer process, and they all depend on the type of transaction that’s been agreed upon. Some of these documents are as follows.

• A rates clearance certificate will have to be obtained from the local municipality.
• Should there be a body corporate, a levy clearance certificate will have to be obtained from the managing body.
• A transfer duty receipt or transfer duty exemption certificate has to be obtained from SARS.

4. Signing of the transfer and bond documents

Both the transferring- and bond attorneys will prepare their documents for signature. It’s important to remember that only the buyer will sign the bond documents. However, both the buyer and seller will sign the transfer documents prepared by the transferring attorney.

5. Obtaining clearance and compliance certificates

The seller will be liable for paying the municipal- and levy-clearance figures in order to get the certificates that are required for the property to transfer into the name of the buyer.

The seller is also responsible for arranging the issuing of the electrical compliance certificate, gas compliance certificate, and electrical fence certificate if applicable.

6. Lodgement of the documents at the deeds office

Once all of the documents are in order, the transfer and bond documents will be submitted to the deeds office for lodgement.

7. Registration of deeds in the deeds office

On lodgement of the documents at the deeds office, the process of registration normally takes eight to ten working days. When the registration is complete, a new title deed will be issued. This will confirm that the buyer is the registered owner of the property.

8. Effecting the financial transaction

Upon registration, the transferring attorney will finalise the parties’ statements of account and pay the proceeds of sale to the seller.

Which costs should the seller be aware of?  

Nel points out that both the buyer and seller have costs to consider when it comes to transferring the title of a house.

The seller needs to cancel their bond when the title of their house is transferred to the buyer. This is done by bond cancellation attorneys, who are appointed by the bank.

“It’s important to remember that a seller must provide the bank with 90-days' notice of their intention to sell their property. Should the seller fail to do this, a penalty fee will be charged,” says Nel.

The seller is also responsible for paying three to six months’ worth of rates, taxes, and levies on the house when they sell it.

“The local council requires this, as this will ensure those costs are covered during the home selling process. Only once this has been paid, will the local council issue a rates clearance certificate,” says Nel.

In addition to this, these compliance certificates – which may come at a cost – are required by the seller:

• Electrical compliance certificate: This ensures that the electrical work done on the property is within regulations.
• Electric fence certificate: If the property has an electric fence installed, the seller will have to obtain a certificate for the fence.
• Water installation system: The buyer may require this certificate, to ensure that all is in order with the property’s water system.
• Plumbing certificate: This certifies that all plumbing work complies with all regulatory installation requirements.
• Gas certificate: The seller needs to provide a gas certificate should there be a gas installation on the property. This confirms that the gas systems are in working order.
• Beetle certificate: This certificate is to ensure that the property is free of wood borer beetles that can damage the structure. It’s mostly applicable to coastal properties.

“Finally, if the seller employed an estate agent, they will be liable for the estate agent’s commission at the amount that was agreed upon in the offer to purchase,” says Nel.

Which costs should buyers prepare for?

When it comes to the buyer, Nel says that there are three main costs that ought to be considered. The first of these is attorney transfer costs.

“These costs are paid to the attorney who attends to the transfer of the property, and they are prescribed by the Legal Practice Council,” says Nel.

Buyers are also responsible for bond attorney registration costs. This is paid to the bond attorney for the registration of the bond.

Finally, they need to consider the cost of transfer duties. This is the tax that’s levied on the sale of the property. This cost is different from transfer fees, and it gets paid directly to SARS.

Can you afford to take on more debt? Find out whether you need debt consolidation first.