After The OTP Is Signed

Tracy HarrisProperties, we believe that it is important for you to know what happens once you’ve signed on the dotted line.

This information is presented as a service by us in the belief that it will help you to better understand the whole procedure of transfer of the property into your name once you have bought your new home.

After you’ve signed the contract

Deposit

The deposit can be considered a sign of good faith and intention. In terms of the Agreement of Sale, it must be paid immediately upon advice from us as your agent that your offer has been accepted by the seller.

We prefer that the depositmust to the transfer attorney, you are protected in that the deposit is held in an interest bearing trust account pending registration of transfer, interest to accrue to you and payable on transfer.

Remember it is your legal obligation to pay the deposit timeously - it is not anybody’s duty to ask for it. Failure to pay the deposit could result in your being in default of the Agreement.

Attorneys

The seller nominates an attorney to attend to the Transfer of the property from himself to you.

There can be as many as three attorneys involved in your purchase, depending on circumstances:

• an attorney who will cancel any existing bonds over the property on behalf of the current bondholder
• another who, duly instructed by the relevant bank, will register your new bond
• and a third who will attend to the transfer itself.

Bonds

Many banks have out-sourced their bond business to companies who specialise in mortgage origination. We make use ofmortgage (bond) originators representing the major banks in South Africa and who specialise in obtaining bonds for our purchasers at highly competitive rates.

If the Agreement of Sale is subject to a loan to be secured by a bond over the property, you will be contacted by one of our specialist loans consultants. Please make the necessary arrangements with them to fill in and sign the bond application timeously. It will then be submitted by them to the relevant bank.

The bond has to be granted within a certain period of time (usually within 10 working days from date of acceptance of your offer by the seller) and it is imperative that your application is processed within that specified time period.

Once your bond has been granted, you will be advised by the bank to call on their attorney to sign acceptance of the bond and to sign the bond documents.

Please act promptly on their instructions for three reasons. Firstly, your prompt action may speed up the entire process of transfer, minimising the amount of occupational interest you may have to pay. Secondly, the bondholders may cancel any loan not taken up fairly quickly. Thirdly, no guarantees can be issued by the bond attorney until the bond documents are signed.

It is worth remembering that the bond business is highly competitive and even though you may have your own arrangements with your bank, it is highly possible that our loans consultants form Ooba will be able to get you a better interest rate on your bond.

Transfer Documents

After your bond has been formally approved, you will be called in by the transfer attorney to sign the transfer papers. Again, please act promptly upon this request. Some time before this you will be called up by him to furnish particulars of your ID number, date of birth, marital status and, if applicable, your original ante-nuptial contract.

A delay in transfer can occur when the price you paid for your property is lower than the municipal valuation. The Receiver of Revenue may call for an explanation as to why the price is relatively low as he is entitled, if he sees fit to do so, to charge duty on the higher figure.

Guarantees

In terms of the Agreement of Sale, you have to secure the balance of the purchase price by the payment of cash or delivery of guarantee. This is the amount still to be paid by you after deduction of the deposit and the bond amount. (The bond guarantee will be furnished by the bank granting it or by their attorney). Payment must be made to the transfer attorney by the date specified. Any cash will be held in trust until transfer.

Check this date carefully. Remember, it is not necessary for the attorney to chase you - it is your responsibility to contact him well in advance of the guarantee date to ask in what form and for what amounts the guarantees are required.

If the Agreement of Sale is subject to a loan to be secured by a bond over the property, you will be contacted by our specialist loans consultants. Please make the necessary arrangements with them to fill in and sign the bond application timeously. It will then be submitted by them to the relevant bank.

Furnishing the guarantees promptly will help to expedite the transfer. Failure to do so may result in your being in breach of Agreement.

Please remember that you may be required to furnish more than one guarantee - obviously never totalling more than the balance of the purchase price still owing.

For example, if there is an existing bond registered against the property which you’ve bought, it is acceptable procedure for the purchaser to be asked to furnish a separate guarantee to cover this possibility, if required to do so by the seller.

Naturally, all your guarantees are only payable against the transfer of the property into your name and the cancellation of any existing bonds registered against the property.

Once you have signed all the transfer and bond documents, paid costs and furnished guarantees, all the necessary documents are lodged with the appropriate Deeds Registry Office by the transfer and bond attorneys. You will be advised by the transfer attorney when registration of transfer of the property has taken place.

Only at this stage will you become the registered owner of the property, and all risk and liability as well as all benefits will become yours.

Disbursements (Transaction Costs)

These are costs related to transfer and the bond.

Bond

When requesting you to sign the bond acceptance, the bond attorneys will also ask you to pay them the bond registration fees (plus value added tax), stamp duty, inspection fee, interim interest on the bond, and miscellaneous postages and petties as well as the deeds office levies.

Transfer

On signing the transfer papers, you will be requested to pay the balance of the purchase price, as discussed under "Guarantees".

You will be asked to pay by cash or cheque to cover transfer duty, provisional assessment rates or levies (in advance and calculated from the anticipated date of transfer). This pro-rata amount for rates or levies will be reconciled by the attorney on the date of transfer. There will also be attorney fees (plus VAT), deed office fees, postages and petties. Note that generally speaking the attorney cannot proceed with lodgement of documents until these amounts have been paid.

The Deeds Registries Act states that transfer documents cannot be lodged in the Deeds Office without the transfer duty receipt from the Receiver of Revenue. So in order to avoid any delays, it is important to pay these costs promptly.

If you have bought a new property from a developer and Value Added Tax is applicable, (included in the purchase price and paid for by the developer), then no transfer duty is payable.

NOTE: Transfer duty, stamp duty, transfer fees, deeds office fees and bond registration fees are set amounts, determined on sliding scales.

Although every effort has been made in the preparation of this information, we cannot be held responsible for any errors or omissions.