The property professional’s checklist for dealmaking

The property professional plays a critical role in the process of buying and selling real estate. When ‘making the deal’, they must engage with the seller to collect information and documentation that will be needed throughout the process. At the time of taking the mandate, it is crucial that they clarify certain facts and obtain specific information and documentation in order to pre-empt any issues that may arise, thus saving time.

The ins and outs of subject to bond approval clauses

The Property Practitioners Act also prescribes that a disclosure be done when the mandate is taken. The property professional must also gather the necessary information and documentation from the buyer. And the more accurate the information obtained at the start of the process, the quicker the transfer process can be completed. 

The checklist below is designed to help to keep the dealmaking process on track and should be especially useful during the conveyancing process. 

Information/documentation to request when taking the mandate:

  • The seller’s bond account number and permission to request cancellation figures or proof of the outstanding bond balance.
    Remember that the outstanding balance won’t be the same as the cancellation figures – the latter are calculated in advance and include possible penalties. Having these numbers will give an indication of any possible shortfalls. 
  • A copy of the building plans – if these are not available, contact the conveyancer to assist with enquiries at council.
  • Confirmation of the property description with the conveyancers, especially when dealing with a sectional title. The description must include any exclusive-use areas. Make a note to ask the seller about this.
  • A copy of the rates account.   

 Information/documentation to request from the seller and buyer: 

  • Full names and ID numbers OR company names and registration numbers OR trust name and the names and registration numbers of trustees. In the case of legal entities, please consult a conveyancer.
  • Residential and postal addresses.
  • Marital status in the case of individuals.
  • Income tax registration numbers.
  • If the seller’s property is unbonded/debt-free, let the seller know that they should locate the original title deed as the conveyancer will request it.
  • Contact details of the body corporate/Homeowners’ Association in the case of a sectional title scheme and/or security estate.   
  • Contact details – email and telephone numbers – of all parties.

Important: The above information and documentation should be requested as early in the process as possible.

Circulating information to the seller and buyer:

It’s crucial that certain information is communicated to the seller at the outset so that they understand the process. It’s also very important to inform them of the services that can be provided in this regard. 

Information to pass on to the seller: 

Before selling the property, the seller must ensure that all rates and associated services have been paid and that the municipal account is up to date. The Municipal Systems Act compels a seller to pay rates up to five months in advance when applying to the Council for the Rates Clearance Certificate (RCC). 

The RCC is available as an abridged certificate which states that all debts for the previous two years have been paid as well as a full clearance certificate which states that all debts associated with the property have been paid. The RCC must be valid for 120 days from issue. Following registration, the account is reconciled and the pro-rata excess is refunded to the seller by the Council. 

In the case of a sectional transfer, the seller must obtain a levy clearance certificate from the Body Corporate or managing property professional acting on their behalf certifying that all levies in respect of a sectional title are paid in full. The certificate must be calculated and valid for a period extending beyond the date of transfer. A Body Corporate can request payment of any arrear and future ‘special levies’ as well as any unpaid ‘non-development penalties’ before they will issue a clearance certificate. An appropriate adjustment will be made following transfer.

The seller must also get an Electrical Clearance Certificate (ECC) from a qualified electrician registered with the Electrical Contractors Board – this serves as proof that the electrical installations comply with the rules of SANS. The ECC is valid for two years provided that installations are correctly maintained during this period. 

Alterations to installations must be covered by a separate certificate. Alternatively, the entire system may be rechecked and a new certificate issued. Should the property be damaged as a result of an electrical fault, the seller’s insurance will require a valid certificate. Not being able to do so may result in your claim being declared invalid. In addition, if a person is injured as a result of an electrical fault where no valid ECC is in place, the owner could be held liable for medical costs and damages. Gas and electrical fence certificates must also be obtained if applicable.

The same would apply to gas and electric fence certificates as above. 

If the property is bonded, the bank will instruct its attorneys to cancel this bond – the seller is responsible for covering the related costs.  

Information to pass on to the buyer: 

The buyer must be informed of the bond and transfer costs involved – the detail can be left to the conveyancers to explain. The transfer duty is an acquisition tax that must be paid by the buyer of immovable property to enable transfer of the property into their name. Payment is made by the attorneys to the Receiver, who issues them with a receipt. No transfer may be lodged at the Deeds Office without being accompanied by the Transfer Duty Receipt.

The transfer duty should be refunded by the Receiver of Revenue if the transaction is mutually cancelled or no breach or specific performance is enforced/claimed. 

Summary

The following information is key to speeding up the conveyancing process: 

  • Status and details of the seller and purchaser.
  • Income tax numbers of the seller, purchaser and property professional.
  • Sellers bank details and bond account number.
  • Sellers rates account number.
  • Contact details of body corporate and HOA.
  • Building plans.  

Want more Snymans articles? Sign up for our monthly newsletter.

Follow Snymans on Facebook for more legal information, tips and news about property.

Recommended for you

Buying tenanted properties - don’t get caught out
Contractual Matters

Electronic signatures and the virtual commissioning of affidavits[post_view before=""]

In our June newsletter, we looked at an interesting court decision handed down in 2020 by the Eastern Cape Division of the High Court of South Africa, related to the application of electronic signatures to offers to purchase land. Last year, the electronic signing of documents once again came under the spotlight in the case of Firstrand Bank Limited v Jacques Louis Briedenhann. Interestingly, this decision was also handed down by the Eastern Cape Division of the High Court, which appears to be making groundbreaking decisions in this regard.

Read More
Buying tenanted properties - don’t get caught out
Contractual Matters

Electronic signatures and OTPs[post_view before=""]

As we live in an online world, and because of the recent pandemic, electronic signatures are becoming more commonplace – and an increasing number of buyers and sellers are asking to sign their OTPs electronically.

Read More
Minors and immovable property
Contractual Matters

When ownership of immovable property is vested in a company[post_view before=""]

There are instances where ownership of land is vested in a company. Typically, a company is registered, usually with one or two directors, and such company then takes transfer of the immovable property. The land is then held in the name of the legal entity (being the company), with the individuals or directors who intend to stay there holding shares in the company.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

An ethical approach to fee discounts[post_view before=""]

Legal fees are regulated by tariff guidelines, which are issued by the Rules Board in terms of the Legal Practice Act. Although these tariffs are guidelines, they are typically followed in the conveyancing industry. As a result, if fees are ever queried, they can usually be backed up by the regulations issued in the Government Gazette from time to time.

Read More
Minors and immovable property
Contractual Matters

The Property Practitioners Act 22 of 2019: what you need to know[post_view before=""]

In 2017, the Government undertook to interrogate the Estate Agency Affairs Act and replace it with one it deemed more suitable. The result was the Property Practitioners Act (PPA), which came into effect on 1 February 2022. In this article, we’ll be touching on some of the highlights – or lowlights, depending on your point of view – of this new act.

Read More

Need more Snymans content?

Sign up for our monthly newsletter.

The property professional’s checklist for dealmaking

The property professional plays a critical role in the process of buying and selling real estate. When ‘making the deal’, they must engage with the seller to collect information and documentation that will be needed throughout the process. At the time of taking the mandate, it is crucial that they clarify certain facts and obtain specific information and documentation in order to pre-empt any issues that may arise, thus saving time.

The ins and outs of subject to bond approval clauses

The Property Practitioners Act also prescribes that a disclosure be done when the mandate is taken. The property professional must also gather the necessary information and documentation from the buyer. And the more accurate the information obtained at the start of the process, the quicker the transfer process can be completed. 

The checklist below is designed to help to keep the dealmaking process on track and should be especially useful during the conveyancing process. 

Information/documentation to request when taking the mandate:

  • The seller’s bond account number and permission to request cancellation figures or proof of the outstanding bond balance.
    Remember that the outstanding balance won’t be the same as the cancellation figures – the latter are calculated in advance and include possible penalties. Having these numbers will give an indication of any possible shortfalls. 
  • A copy of the building plans – if these are not available, contact the conveyancer to assist with enquiries at council.
  • Confirmation of the property description with the conveyancers, especially when dealing with a sectional title. The description must include any exclusive-use areas. Make a note to ask the seller about this.
  • A copy of the rates account.   

 Information/documentation to request from the seller and buyer: 

  • Full names and ID numbers OR company names and registration numbers OR trust name and the names and registration numbers of trustees. In the case of legal entities, please consult a conveyancer.
  • Residential and postal addresses.
  • Marital status in the case of individuals.
  • Income tax registration numbers.
  • If the seller’s property is unbonded/debt-free, let the seller know that they should locate the original title deed as the conveyancer will request it.
  • Contact details of the body corporate/Homeowners’ Association in the case of a sectional title scheme and/or security estate.   
  • Contact details – email and telephone numbers – of all parties.

Important: The above information and documentation should be requested as early in the process as possible.

Circulating information to the seller and buyer:

It’s crucial that certain information is communicated to the seller at the outset so that they understand the process. It’s also very important to inform them of the services that can be provided in this regard. 

Information to pass on to the seller: 

Before selling the property, the seller must ensure that all rates and associated services have been paid and that the municipal account is up to date. The Municipal Systems Act compels a seller to pay rates up to five months in advance when applying to the Council for the Rates Clearance Certificate (RCC). 

The RCC is available as an abridged certificate which states that all debts for the previous two years have been paid as well as a full clearance certificate which states that all debts associated with the property have been paid. The RCC must be valid for 120 days from issue. Following registration, the account is reconciled and the pro-rata excess is refunded to the seller by the Council. 

In the case of a sectional transfer, the seller must obtain a levy clearance certificate from the Body Corporate or managing property professional acting on their behalf certifying that all levies in respect of a sectional title are paid in full. The certificate must be calculated and valid for a period extending beyond the date of transfer. A Body Corporate can request payment of any arrear and future ‘special levies’ as well as any unpaid ‘non-development penalties’ before they will issue a clearance certificate. An appropriate adjustment will be made following transfer.

The seller must also get an Electrical Clearance Certificate (ECC) from a qualified electrician registered with the Electrical Contractors Board – this serves as proof that the electrical installations comply with the rules of SANS. The ECC is valid for two years provided that installations are correctly maintained during this period. 

Alterations to installations must be covered by a separate certificate. Alternatively, the entire system may be rechecked and a new certificate issued. Should the property be damaged as a result of an electrical fault, the seller’s insurance will require a valid certificate. Not being able to do so may result in your claim being declared invalid. In addition, if a person is injured as a result of an electrical fault where no valid ECC is in place, the owner could be held liable for medical costs and damages. Gas and electrical fence certificates must also be obtained if applicable.

The same would apply to gas and electric fence certificates as above. 

If the property is bonded, the bank will instruct its attorneys to cancel this bond – the seller is responsible for covering the related costs.  

Information to pass on to the buyer: 

The buyer must be informed of the bond and transfer costs involved – the detail can be left to the conveyancers to explain. The transfer duty is an acquisition tax that must be paid by the buyer of immovable property to enable transfer of the property into their name. Payment is made by the attorneys to the Receiver, who issues them with a receipt. No transfer may be lodged at the Deeds Office without being accompanied by the Transfer Duty Receipt.

The transfer duty should be refunded by the Receiver of Revenue if the transaction is mutually cancelled or no breach or specific performance is enforced/claimed. 

Summary

The following information is key to speeding up the conveyancing process: 

  • Status and details of the seller and purchaser.
  • Income tax numbers of the seller, purchaser and property professional.
  • Sellers bank details and bond account number.
  • Sellers rates account number.
  • Contact details of body corporate and HOA.
  • Building plans.  

Want more Snymans articles? Sign up for our monthly newsletter.

Follow Snymans on Facebook for more legal information, tips and news about property.