MCPurchasersGuide
INDEX 1. Introduction... 2 2. M.C. van der Berg Incorporated An Introduction... 2 3. Terminology... 3 4. Before making the offer to purchase... 4 5. Rules of the game - the purchase agreement... 4 6. Consumer Protection Act (CPA)... 4 7. The purchaser entity... 5 8. Provision of the purchase price... 5 9. Suspensive conditions... 5 10. National Credit Act (NCA)... 6 11. Guarantees... 6 12. Selling your current property... 7 13. Roles of the different attorneys... 8 14. Costs... 9 15. Patent and latent defects... 10 16. Building plans... 11 17. Sectional Title Body Corporate and Homeowners Association (HOA)... 11 18. Fixtures and fittings... 11 19. South African Revenue Service (SARS)... 12 20. Compliance Certificates (COC s)... 12 21. Occupation and occupational rent... 13 22. Commission - liability... 14 23. FICA (Financial Intelligence Centres Act) and POPI (Protection of Personal Information Act)... 15 24. Flow chart of the transfer process... 15 25. How you can facilitate a smooth transaction... 16 26. Message from the directors... 16 Revised July 2018 Legal indemnity M.C. van der Berg Inc. has compiled this MCPurchasersGuide and provided it to you in an effort to give general legal advice regarding the sale of property. It must not be construed as being specific advice applicable to your transaction. Furthermore, it does not bind us, the banks or any other party. Changes in legislation, procedures and processes are frequent and readers should contact us to ensure that they obtain advice that is correct and up-to-date. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018
1. Introduction M.C. van der Berg Inc. provides our MCPurchasersGuide free of charge with the purpose of introducing our firm and supplying important information to you, the prospective purchaser. This guide will also assist estate agencies to comply with their obligations in terms of the Consumer Protection Act (CPA). Because we know you are probably busy, we have taken the opportunity to highlight certain aspects that we know require your immediate attention before you make an offer to purchase (OTP). You should therefore take note in particular of all the aspects marked with The MCPurchasersGuide contains all the information you need to know before you make an offer to purchase (OTP). Information about the process involved after your offer to purchase has been accepted is available in our MCQuickGuide. Once you instruct us to handle your property transfer, we shall gladly forward this guide to you. A separate guide titled the MCBondGuide explains the common terms, procedures, legislation and timelines relating to the bond registration process. For your convenience, the MCPurchasersGuide, the MCBondGuide, the MCSectionalTitleGuide are all available on our website at www.mcvdberg.co.za. The MCPurchasersGuide outlines the most important stumbling blocks you may encounter in the legal process related to buying a property, so it is worth taking some time to read it. We trust you will find the information useful and that it will result in a mutually beneficial business relationship. We are here to assist you when facing the labyrinth of laws, rules, regulations and contractual requirements that accompany a property purchase. 2. M.C. van der Berg Incorporated An Introduction M.C. van der Berg Inc. Attorneys, Conveyancers and Notaries is a well-established law firm specialising in property law since 1999. While our head office is in Centurion, we also have an office at Midstream, Pretoria East and Pretoria North. Our company conducts business in the greater Pretoria, Centurion, Ekurhuleni, Midrand, Johannesburg and surrounding areas. The primary focus of our practice is giving legal advice pertaining to property law, drafting agreements, handling property transfers as well as registering new bonds and cancelling existing ones. We also attend to the registration of trusts, estate planning, drafting of wills, winding up deceased estates, registration of ante nuptial contracts and other notarial services. M.C. van der Berg Inc. undertakes to handle the expedited and hassle-free transfer of your property and keep you informed with relevant and contextualised feedback on a regular basis. We believe that our unique and efficient feedback system is one of the aspects that differentiate us from others. You will not be kept in the dark and we shall keep you informed when important milestones in your transaction are reached. We offer a free consultation to discuss your transaction. For more information on M.C. van der Berg Inc. please visit us at www.mcvdberg.co.za. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 2 of 16
3. Terminology The following list of common legal terms will make it easier for you to understand the legalese: Attorney definitions Attorney A person who has been admitted by the High Court and practises law. Conveyancer An attorney who has passed an additional exam before being admitted by the High Court as such and who specialises in property law. Transferring attorney The firm of attorneys and, more specifically, the conveyancer who is responsible for transferring a property from the seller to the purchaser. The transferring attorney plays a pivotal role in the successful completion of the transfer process. Bond attorney The firm of attorneys responsible for the registering a purchaser s bond. This firm needs to serve on the registration panel of the particular bank to which the purchaser applied for a bond. M.C. van der Berg Inc. serves on registration panels of several banks, including Absa, FNB, Nedbank, Standard Bank, SA Home Loans and HIP (Housing Investment Partners). Cancellation attorney The firm of attorneys responsible for the cancellation of the seller s bond. This firm needs to serve on the cancellation panel of the particular bank where the seller s bond is registered. M.C. van der Berg Inc. serves on the bank cancellation panels of Absa, Nedbank, FNB and Standard Bank. Registration terms Registration An administrative act that takes place in the deeds office on a specific date. Registration refers to the date on which the transaction is finalised, i.e. the property is transferred, the purchaser s bond is registered and the seller s existing bond (if any) is cancelled. Transfer An action (registration) that occurs on a specific date at the deeds office and happens simultaneously with bond registration and bond cancellation. Bond registration An action that occurs on a specific date at the deeds office when the purchaser s bond is registered. This action happens simultaneously with transfer and bond cancellation. Bond cancellation This action occurs on a specific date at the deeds office when the seller s bond is cancelled. It happens simultaneously with transfer and bond registration. Contract terms Offer to purchase (OTP) This is a written offer that the purchaser makes to a seller to purchase his/her property. It specifies all the purchaser s conditions relating to purchasing the property. Purchase agreement Once a seller accepts the offer to purchase in writing, it becomes the purchase agreement. This is also known as a deed of sale. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 3 of 16
Guarantee In this document, the purchaser s bank promises to pay the purchase amount into either the seller s bond account or the transferring attorney s trust account on an unspecified future date when registration occurs. 4. Before making the offer to purchase The offer to purchase which is made by you, as the purchaser, will become the purchase agreement once the seller accepts it in writing. Both the purchase agreement and legislation create the rules that apply to the transferring attorney when your property is transferred. It is very important to take note of certain key aspects contained in this guide and to scrutinise the estate agent s pro forma agreement before you make an offer to purchase. Rather be safe than sorry! 5. Rules of the game - the purchase agreement The purchase agreement is the instruction and mandate which the parties give to the transferring attorney and we cannot deviate from it. Besides scrutinising the OTP before you accept it, be mindful of the following important aspects: Pro forma offers to purchase that various estate agents present to you generally contain a clause stipulating that the purchase agreement constitutes the complete and only agreement between the seller and the purchaser. Remember therefore, not to accept or give any verbal undertakings as these will be unenforceable. Make sure the purchase agreement contains this clause to indemnify yourself against possible claims resulting from professed verbal undertakings or guarantees. Pro forma offers to purchase that various estate agents present to you usually also contain a clause stipulating that amendments and variations to the purchase agreement must be in writing and signed by both parties before it is valid. Remember that verbal amendments and variations to the purchase agreement are not enforceable! Our conveyancing experts can assist you with legally correct addendums should you wish to amend certain clauses in the purchase agreement. 6. Consumer Protection Act (CPA) Be cautious when interpreting the scope of the CPA as it is not applicable to all transactions! Purchasers often have the misconception that they are entitled to certain rights in terms of this Act. This may however, not necessarily be true. The primary objective of the CPA is to protect consumers in the commercial world. However, it does not regulate all transactions and business relationships. Take note that the only transactions that fall within the ambit of the CPA are where someone selling a property does so in the normal course of business. For example, if you (a purchaser) make an offer to Joe Soap (a seller), the CPA will not be applicable to the seller-purchaser relationship. The CPA will, however, usually be applicable if you purchase a property from a speculator or a developer. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 4 of 16
The CPA will regulate transactions involving an estate agent who provides a service to you in the normal course of his/her business. The Act governs the relationship between the seller and the agent on the one hand, and the purchaser and the agent on the other. For this reason, we have also compiled this MCPurchasersGuide to help estate agencies to comply with CPA requirements. 7. The purchaser entity In most cases, a purchaser prefers to register his/her primary residence in his/her personal capacity as it may be beneficial for capital gains tax (CGT) purposes. It is always advisable to obtain proper advice about the benefits of purchasing property using other business entities such as trusts. Proper estate planning is essential, especially when you are purchasing a second or additional property. 8. Provision of the purchase price The purchase price can be sourced from one of the following: 1) Deposit 2) Bond 3) Sale of your current property and/or 4) Investment The agreement should clearly specify the source of the funds that will be used to pay the purchase price. The agreement must also stipulate the timeframes in which the funds will be delivered. 9. Suspensive conditions If protecting yourself is a priority, you can make an offer to purchase that is subject to suspensive conditions. Please note that a purchase agreement containing suspensive conditions will not be legal and binding unless these conditions are fulfilled timeously and to the letter. Any deviation from the terms of a suspensive condition has to be addressed in an addendum before the due date of such a condition. 9.1 Mortgage loans If you need to obtain funds from a financial institution, it is likely that you will have to make your offer subject to the approval of a bond. Depending on your financial situation, having a bond approved should not take longer than a month. If circumstances require a longer period for bond approval, it s important that you communicate these to the seller via the estate agent. Using the services of a bond originator may hasten the process of bond approval. In general, banks are not in favour of a transaction where the transfer and bond registration costs are included in the purchase price and form part of the loan amount. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 5 of 16
Certain banks may allow this (for example, for first-time purchasers). As a purchaser, make sure to inform your bank that this cost component has been added to the loan amount. Your bond originator and/or personal banker will be able to give you proper advice on the bank s products. Never sign an addendum which stipulates that the seller or agent will pay the transfer fees or that the selling price will be reduced. This is fraud and it will be seen as an attempt to mislead the bank! 9.2 Subject to the sale of another property For various reasons (e.g. affordability or availability of funds), a purchaser or his/her bank often stipulates a prerequisite that his/her current property must first be sold and registered before a property can be transferred or a new bond that funds the transaction, can be registered. The proceeds from this preceding transaction are often also required to fund the subsequent transaction. If an offer to purchase is made subject to the sale of a purchaser s property, the parties must ensure that the agreement of sale deals with this effectively to protect both purchaser and seller. This matter is often handled haphazardly to the detriment of both parties. For example, a seller may not wish to decline an offer to purchase, but may also be reluctant to withdraw his/her property from the market for a prolonged period while awaiting the sale and registration of a purchaser's property. Note that if an offer is subject to both a bond approval and the sale of a purchaser s property, the bond approval date must commence from date of acceptance of the offer and not from date of sale of the purchaser s property. It is important, therefore, to establish whether the purchaser qualifies for the loan as soon as possible. The purchaser will be protected as the bank will grant the loan subject to the sale of his/her current property. The wording of this condition may cause great discord between a seller and a purchaser. Despite the best intentions, words sometimes used in good faith have ambiguous meanings, which can then have legal implications. Do not hesitate to contact us or your estate agent to assist you in wording such a clause. 10. National Credit Act (NCA) In terms of the National Credit Act, the bank where you apply for a loan must provide you with a quotation which outlines the loan amount, interest rate, administrative costs, monthly payment and total costs of the loan. This quotation is open for acceptance for five days after it has been issued. Once you accept the bank s quotation, it will issue a final bond approval. This final approval should be obtained before or on the deadline stipulated in the purchase agreement. 11. Guarantees A guarantee is a promissory document in which a bank undertakes to pay an agreed amount on behalf of the purchaser to either the seller s mortgage loan account or to the transferring attorney s trust account on an unspecified future date when registration occurs. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 6 of 16
The transferring attorney must ensure that the purchase price is secured on date of registration, the seller s mortgage loan is paid up and the bond is cancelled. The seller s bank will not consent to cancellation of the bond if the required guarantees have not been issued in accordance with the cancellation figures. These guarantees can originate from various sources, which include the following: 11.1 From the purchaser s loan The bond registration attorney or the bank that granted the loan issues guarantees once a purchaser has signed all the bond documentation and complied with all the banks requirements. It takes 10 to 14 calendar days after a bond has been approved for the guarantees to be issued. 11.2 From a cash deposit If cash is involved in any aspect of the purchase price, these funds will have to be deposited into the transferring attorney s trust account to enable the attorney to issue the relevant guarantees. 11.3 From an investment If a purchaser has funds invested in a South African financial institution, such institution can issue guarantees to the transferring attorney. 11.4 From a pre-sale If a purchaser is using the proceeds from the sale of his/her property, the transferring attorney will request guarantees from the attorney attending to the registration of such a pre-sale. 12. Selling your current property If any of the funds for the purchase of your new property need to be obtained from the sale of your current property, or if you simply cannot afford to pay two bonds, you can make the offer to purchase subject to the successful sale and registration of your current property. The bank where you apply for a loan may also make this a prerequisite. Sellers are generally not inclined to simply accept offers that are subject to the sale of other properties. There are, however, ways you can encourage a seller to accept your offer, by incorporating certain legal provisions into your OTP. Exercise caution however, as the wording of these provisions in contracts can cause great discontent between you and the seller. Avoid this by studying the wording of these clauses carefully. Also ensure that you have sufficient time to comply with the suspensive conditions. If your offer is subject to bond approval as well as to the sale of your current property, it is essential to apply for your bond immediately. Don t wait to do this until the successful sale of your current property! If a bank grants a loan in this situation, you will be protected because the registration of such a bond will be subject to the sale and registration of your current property. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 7 of 16
13. Roles of the different attorneys Various conveyancing firms can be involved in a typical property transaction, depending on the nature of the transaction and the required actions in the deeds office. Several different attorneys or a single legal firm can handle these actions. It is obviously much faster and convenient for the parties if only one law firm deals with all aspects of the transaction. In order to handle everything in a sales transaction, the transferring attorney needs to serve on both the bond registration- and bond cancellation panels of the relevant bank. The different legal role players are: 13.1 The transferring attorney The transferring attorney, whom the seller usually appoints, is the conveyancer responsible for transferring the property into the purchaser s name. The transferring attorney s wide-ranging responsibilities include: 1) ensuring that the parties comply with the terms of the sale agreement and, if not, that the necessary steps are taken to enforce the terms; 2) drafting all the legal documents and overseeing the signature thereof; 3) obtaining the transfer duty receipt/exemption from SARS as well as the clearance certificates from the Municipality and possible HOA s (and sectional title body corporate, if applicable); 4) holding the deposit in trust and dealing with the financial aspects of the transaction; 5) coordinating the lodgement of these documents at the deeds office once they are satisfied that all legal and contractual requirements have been met; and 6) ensuring that the relevant certificates of compliance (COC s) are in place (e.g. the electrical and gas certificates). The parties must ensure that they appoint a respected and independent conveyancing practice to deal with the transaction. Be wary of conveyancers with a conflict of interest, especially where the conveyancers are also acting as estate agents in the transaction. M.C. van der Berg Inc. will gladly oversee your property transfer. 13.2 The bond registration attorney The bond registration attorney is the conveyancer who oversees the registration of the purchaser s bond. In terms of the bank s service level agreement, the bond registration attorney is expected to: 1) act in the best interest of the bank at all times; 2) draft all the bond documents as required by the bank, check that it complies with relevant legislation and oversee that document are signed; 3) issue the guarantees after the purchaser has signed all legal documents; 4) obtain all necessary supporting documents for submission to the bank such as FICA documents (identity document and proof of residence), building plans, sectional title plans, COC s, gas certificate, life cover documents; M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 8 of 16
5) ensure that all special conditions and requirements as per the bank s instruction are adhered to and complied with; 6) submit the signed bond documents as well as FICA documents to the bank to obtain permission to proceed with registering the mortgage bond. Some banks will allow a purchaser to nominate the attorney who should attend to the registration of his/her bond. Such attorneys must be on the bond registration panel of the bank involved. If you as a purchaser want M.C. van der Berg Inc. to oversee your bond registration, you will need to give an instruction to your personal banker or bond originator to ensure they appoint us as the bond registration attorney. M.C. van der Berg Inc. serves on the bond registration panels of Absa, FNB, Nedbank, Standard Bank, HIP (Housing Investment Partners) and SA Home Loans. 13.3 The bond cancellation attorney The bond cancellation attorney is the conveyancer who oversees the cancellation of a seller s bond (if applicable). The attorney firm attending to the cancellation on behalf of a seller s bank must serve on that specific bank s bond cancellation panel. M.C. van der Berg Inc. serves on the bond cancellation panels of Absa, FNB, Nedbank and Standard Bank. If we are appointed to oversee the transfer of the property, we shall apply to the seller s bank for the cancellation figures and thereafter handle the cancellation of the seller s existing bond. 14. Costs For a complete explanation of the costs payable by the purchaser, please use the MCostCalculator on our website: www.mcvdberg.co.za. 14.1 Transfer costs The purchaser is required to pay all fees and expenses mentioned in this category. The term transfer costs refers to the costs that are payable to transfer a property from the seller to the purchaser. This component includes transfer duty and the transferring attorney s professional fees. There are also a number of administrative charges and fees that are payable, for example document generation costs, deeds office levies, post and petties, FICA fees, etc. All these fees and disbursements are payable to the transferring attorney after signature of the transfer documents. However, we need payment of the transfer duty amount as soon as possible to enable us to pay the amount to SARS and obtain the transfer duty receipt/exemption certificate. Attending to payment as soon as possible will prevent possible delays in obtaining the transfer duty receipt/exemption certificate. We cannot register the property before receipt of the transfer costs. The professional fee is linked to the value of a property. We adhere to the guidelines issued by the Law Society of South Africa relating to fair and reasonable fees. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 9 of 16
14.2 Bond registration costs The purchaser is required to pay all fees and expenses mentioned in this category. The term bond registration costs refers to the cost payable for registration of the purchaser s bond (if applicable). The costs include the conveyancer s professional fees and other expenses. This fee is linked to the bond amount being registered. We adhere to the guidelines issued by the Law Society of South Africa relating to fair and reasonable fees. This bond registration costs includes the professional fee of the bond registration attorney as well as some administrative charges and fees that are payable, for example document generation costs, deeds office levies, post and petties, etc. All these fees and disbursements are payable to the bond registration attorney after signature of the documents. A bond cannot be registered until the bond registration costs have been paid. 15. Patent and latent defects Defects to a property are the most common reason for discontent. This often results in litigation, mainly because parties are misinformed about the legal position regarding defects. Patent defects to a property are those defects that can be seen with the naked eye or can be ascertained by conducting a reasonable inspection of the property. This can include broken windows, damp, defective electrical appliances and even the incorrect zoning or non-approved plans of the property. A purchaser has a legal obligation to conduct a thorough inspection of a property to establish any patent defects before making an offer. If a purchaser neglects to do the required inspection, it is presumed that he/she is aware of all the patent defects and that he/she is satisfied to buy the property in that condition. Neither a seller nor an agent has any obligation to disclose any patent defects or inspect the property on the purchaser s behalf. If a purchaser is not satisfied, he/she should address the defects in the offer to purchase. Latent defects to a property are those defects that cannot be seen with the naked eye or ascertained by conducting a reasonable inspection of the property. This can include roof leakages, underground termites, an incorrectly installed geyser and dampness behind a cabinet. If a property is offered and sold in the condition as it stands ( voetstoots ), it means that the seller does not guarantee the absence of latent defects. The purchaser will then bear the risk and costs of repairing the latent defects unless the purchaser can prove the seller had prior knowledge of the latent defects and fraudulently omitted to disclose it before concluding the agreement. In the spirit of the Consumer Protection Act (CPA), most estate agencies require sellers to complete a so-called property report. Although this report is not legally compulsory, it is highly recommended that a seller completes it. Sellers and purchasers should study this report to ensure they understand the scope of its contents. If drafted correctly, this document protects both the seller and the purchaser as it informs every one of their responsibilities and liabilities relating to latent and patent defects. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 10 of 16
Purchasers should obtain and study the property condition report (if available) at their first viewing of the property. Purchasers are also entitled to appoint a house inspector or professional person at their own expense to carry out an inspection on their behalf. Whether a purchaser or other professional inspects a property, it is important to do this before the purchaser and seller sign the offer. Remember that a purchaser will not be able to insist that the seller must repair any defects if the sales agreement does not include such an obligation. The purchaser will also not be able to demand a reduction of the purchase price because he/she noticed defects after signing the sales agreement. 16. Building plans It is not a legal requirement that as-built plans must be approved before registration can take place. There is also no obligation on the estate agent, the seller or a property valuator to request and obtain these plans. This is because, as with any other regulatory measures, building plans fall under the doctrine of patent and latent defects. As a purchaser, make sure to read the pro forma agreement carefully to ascertain the position with as-built plans and incorporate a condition to this effect, if necessary, in the sales agreement. 17. Sectional Title Body Corporate and Homeowners Association (HOA) If you want to purchase a property that is regulated by a sectional title body corporate and/or HOA, you are obliged to apply for membership at the HOA. You (as the purchaser) will automatically become a member of the body corporate of a sectional title scheme once the property is registered in your name. This means you will be subject to the rules of this entity, so it s a good idea to obtain the rules beforehand and study them carefully. Our MCSectionalTitleGuide provides more useful information on sectional titles and is available on our website at www.mcvdberg.co.za. 18. Fixtures and fittings It is important to be able to distinguish between the terms fixtures and fittings. Fixtures form part of the property and may not be removed when the seller moves. They are therefore sold with the property. These items include, but are not limited to, the following items: stove, air conditioning, fitted TV/M-Net aerials/satellite dish, alarm, pelmets, swimming pool cleaning equipment, etc. Fittings are regarded as items that do not form part of the property and that the seller can take with him when he moves. Fittings and items that are excluded from the sale and that will subsequently be removed by the seller need to be specified in the purchase agreement. Purchasers and sellers often disagree on this issue because it is not always clear in which category a certain item falls. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 11 of 16
There are a few broad legal principles that determine whether a particular item is a fixture or a fitting. Note that these legal principles cannot cater for each and every unique situation, so it is advisable to distinguish between the two in the purchase agreement. We recommend that you insert an extensive list of fixtures in your offer to purchase (if provision is made for it). Alternatively, ask your attorney to add an addendum to the offer to purchase in which you specify the list of items you deem to be fixtures, which will therefore form part of the transaction. The pro forma offers to purchase that some estate agents use already contain a comprehensive list of both fixtures and fittings. While this list is a broad attempt to assist the parties, it is still not a customised list. 19. South African Revenue Service (SARS) A property transaction cannot be processed unless both parties have income tax numbers. If you do not have an income tax number, take immediate steps to obtain one. SARS carries out a risk analysis on both the purchaser and the seller before issuing a transfer duty receipt. All tax-related matters (whether private or otherwise), including but not limited to tax returns and payments, should therefore be up to date. If this is not the case, you should do so immediately. Failure to do so will delay the transaction. 20. Compliance Certificates (COC s) The Occupational Health and Safety Act requires a seller to provide a purchaser (or the transferring attorney) with certain compliance certificates before occupation or registration takes place, whichever is the earliest. Note that the seller is liable to pay the cost of these certificates together with any repair work, unless otherwise agreed upon in your purchase agreement. The scope of these certificates is limited as it simply certifies that the installation involved is safe. It does not certify that all electrical-, gas- and electric fence installations are in working condition. 20.1 Electrical certificate of compliance The Occupational Health and Safety Act requires a seller to provide a purchaser (or transferring attorney) with an electrical certificate of compliance before occupation or registration, whichever is earlier. This certificate certifies that the electrical installation is safe and complies with SABS standards. Although the certificate makes no reference to the working order of the installation or to any appliances such as stoves and geysers, the specific clause relating to an electrical compliance certificate in your purchase agreement may require that these installations and appliances are in working order. In this case the seller would be obliged to ensure they are indeed functional. Should the seller already have an electrical compliance certificate, it may not be older than two years on date of registration of the property. If any alterations or additions were made to the electrical installation after the certificate was issued, it becomes void and the seller will need to M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 12 of 16
obtain a new certificate. Take note that the purchaser s bank will also require a copy of the electrical certificate before it gives permission to lodge the documents at the deeds office. 20.2 Electric fence compliance certificate When transferring a property connected to an electric fence, the Occupational Health and Safety Act requires a certificate certifying that the installation is in accordance with the relevant SABS standards. The seller needs to deliver this certificate, known as the electric fence compliance certificate, to either the purchaser or transferring attorney before occupation or registration, whichever is earlier. Note that it is not the same certificate as an electrical compliance certificate. While an electric fence compliance certificate is transferable, it becomes void if any alterations or additions are made to the installation. This means a new certificate will have to be issued. 20.3 Gas certificate This certificate must certify that the gas installation (if applicable) is safe and complies with the applicable SABS standards. Note however that any alteration or addition to the gas installation will make the certificate void and the seller will need to ask a certified installer to issue a new certificate. The Regulations do not prescribe the validity period for which a gas certificate is valid. Any modification or alteration to the installation will however require a new certificate. The Regulations require that the coupling hoses must be replaced every 5 years. As this is a modification it indirectly limits the validity of the certificate to 5 years. Apart from the aforementioned a new gas certificate is required every time the owner or user of the installation, changes. In other words when a property is sold, a new gas certificate is required. 20.4 Plumbing- or water certificate (only applicable to properties in the Cape Town area) A plumbing certificate guarantees that: 1) the water installation conforms to the National Building Regulations and relevant by-laws; 2) the installation has no defects; 3) the water meter is in a working condition and registers when there is water running; and 4) there is no discharge of storm water in the sewer system. 20.5 Beetle certificate (only applicable to properties situated in coastal areas) This certificate guarantees the absence of beetles in or on the property. It is important to ensure that the certificate includes a guarantee relating to all beetles and not only to one specific beetle species. 21. Occupation and occupational rent The term occupation refers to the date on which a seller is obliged to give vacant possession of a property to a purchaser. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 13 of 16
Since the date of occupation poses risks for the seller and purchaser, the transferring attorney must regulate it to protect both parties. It can cost both parties dearly if the transaction is cancelled after taking occupation. Once the parties agree in the purchase agreement to give occupation on a specific date, they are contractually and legally bound to this date. The transferring attorney cannot unilaterally relax conditions or enforce conditions not agreed upon at the will of either party. It is therefore imperative that the parties apply their minds and contractually agree on which requirements must be in place before occupation can occur. (Examples of such requirements are obtaining loan approval and paying the deposit). M.C. van der Berg Inc. will monitor the process and ensure that the requirements are met before the purchaser can take occupation. The term occupational interest refers to the rent payable by either of the parties occupying the property while it is still registered in the name of the other party. Usually, the purchaser will pay occupational rent to the seller if the property is occupied before date of registration. Since there is no established rule stipulating what the occupational rent amount should be, parties can therefore negotiate an amount. Note that once you have agreed on the amount of occupational rent payable, you are legally bound to that amount. Kindly remember that a purchaser cannot open a utilities account at the municipality in his/her name before registration. Therefore, any utilities costs will remain for the seller s account until registration. In addition to agreeing on the occupational rent, both parties need to agree on an estimated advance amount for these utilities. 22. Commission - liability Today s estate agents are well-qualified professionals, who are expected to be competent and effective in their business dealings with you. Bear in mind that the commission is their incentive and reward for their services. With commission having caused many legal disputes between agencies and purchasers, it s important to note the following: 22.1 Introduction to the property It may happen that more than one agent introduces you to a property on which you eventually make an offer to purchase (OTP). If a second or further agent introduces you to the same property that you have already viewed through another agency, you are obliged to reveal this fact to both agencies, preferably in an email for record purposes. 22.2 Private sale - commission claim Under no circumstances should you approach a seller directly with an offer after an agent has introduced you to a property. It is also not advisable to ask friends, family or business partners to make an offer on your behalf. If the agency later learns (and it is highly likely they will find out) that you made an offer directly to the seller, they can claim the commission from you in certain circumstances. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 14 of 16
23. FICA (Financial Intelligence Centres Act) and POPI (Protection of Personal Information Act) 23.1 FICA FICA is an acronym for the Financial Intelligence Centres Act. FICA requires that certain nominated individuals and institutions like attorneys, banks and estate agents need to verify certain information and keep records thereof. Accordingly, a purchaser will also need to provide certain documentation such as an identity document and proof of residential address (e.g. Vodacom or municipal account). Furthermore, we have a statutory obligation to disclose and report certain suspicious transactions. The primary objective of FICA legislation is to prevent money laundering and the flow of income earned from illegal activities. FICA legislation obliges transferring attorneys and other involved parties to report transactions involving cash payments of R25 000 or more to the Financial Intelligence Centre (FIC). Our first letter to you contains a list of original FICA documents that you need to bring along when you sign the transfer and bond documents (if applicable) at our office. 23.2 POPI POPI is an acronym for the Protection of Personal Information Act. In terms of this Act, we need your consent to process your personal information (i.e. your identity number, contact details, email address etc.). We shall present this consent when you sign the transfer- and/or bond documentation (if applicable) at our offices. Rest assured that we comply fully with the POPI Act. This means that we shall only process your information for the purpose of property transfers and/or bond-related issues. 24. Flow chart of the transfer process A flow chart of the transfer process can be found on the last page hereof. The normal turnaround time for a transfer is approximately six to eight weeks from receipt of the bond instruction by the bond attorney. This means that week 1 begins when the bond attorney receives the bond instruction. As the bond approval period are negotiated between the parties, it might differ from contract to contract and therefore the flowchart will indicate it as unknown. Find out more about the transfer process by viewing our MCQuickGuide on our website at www.mcvdberg.co.za. M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 15 of 16
25. How you can facilitate a smooth transaction There are several things you can do to assist us in ensuring that your transaction runs smoothly, such as: 1) Obtain the agency s pro forma agreement and study it carefully before making an offer to purchase (OTP); 2) Determine whether the Consumer Protection Act is applicable to your transaction; 3) Establish the bond amount for which you qualify by contacting your bank or a bond originator; 4) Use our MCostCalculator at www.mcvdberg.co.za to calculate your transfer costs and bond registration costs before making an offer to purchase; 5) Obtain the rules of the sectional title body corporate and/or homeowners association, if applicable, beforehand and read them carefully; 6) Make sure you have a tax number and that your tax affairs are in order; 7) Ensure that you have an original identity document and proof of physical address not older than three months for FICA purposes; and 8) Request your bank or the bond originator to appoint M.C. van der Berg Inc. as your bond registration attorney. 26. Message from the directors The directors of M.C. van der Berg Inc. trust that this MCPurchasersGuide will provide you, our valued client, with essential information and useful advice. We furthermore trust that the information contained in this guide together with our professionalism, effectiveness and expertise will result in a trouble-free, enjoyable and exceptional business experience. We invite you to put your trust in M.C. van der Berg Inc. You are welcome to contact us if you have any queries. Visit our website at www.mcvdberg.co.za, contact us on 012 660 6000 or email us at info@mcvdberg.co.za. The MC-Team looks forward to meeting you over the best cup of coffee in town! M.C. van der Berg Attorneys, Conveyancers & Notaries Inc. 2018 Page 16 of 16
Tel: 012 660 6000 Email: info@mcvdberg.co.za Fax: 012 660 6001 Website: www.mcvdberg.co.za Centurion: Cnr Saxby East & Frederik Streets, Eldoraigne Midstream: G1 Ashford House, 7 Ashford Road, Midstream Estate, Ekurhuleni Pta East: 32 Garsfontein Office Park, 645 Jacqueline Drive, Constantia Park, Pretoria
Tel: 012 660 6000 Email: info@mcvdberg.co.za Fax: 012 660 6001 Website: www.mcvdberg.co.za Centurion: Cnr Saxby East & Frederik Streets, Eldoraigne, Centurion Midstream: G1 Ashford House, 7 Ashford Road, Midstream Estate, Ekurhuleni Pta East: 32 Garsfontein Office Park, 645 Jacqueline Drive, Constantia Park, Pretoria