Seller and Buyer Tips

The Agreement of Sale

Both seller and buyer have respective rights and responsibilities in terms of the agreement of sale. It is important that both parties familiarise themselves with all the terms & conditions of the agreement to ensure that they understand their role and honour their responsibilities timeously, i.e. paying a deposit by due date / delivering of guarantees within the said timeframe. Ignorance in law is no defence, therefore read your contract.

Consumer Protection Act (CPA), 68 of 2008 and the Voetstoots clause

What does Voetstoots mean?

When immovable property is sold “Voetstoots” it means that a property is bought “as is”. By law the seller has an obligation to disclose all defects, latent and/or patent, of which he was aware or should reasonably have been aware at the time of selling the property. The effect of this clause is should a defect present itself, and the seller was not aware same, he will be successful in relying on the “Voetstoots” clause as a defence.

Should a buyer disagree with a seller who is relying on the “Voetstoots” clause, the burden of proof will be on the buyer to convince the Court beyond reasonable doubt that the seller was aware or should reasonably ought to have been aware of the defect and that he maliciously concealed the defect in an at-tempt to defraud the buyer.

 

How does the CPA impact the ‘voetstoots’ clause?

Since the commencement of the CPA on the 1st of April 2008 there has been a lot of speculation around on the position of the voetstoots clause in relation to the CPA. It is important to note that the CPA will only be applicable where the relevant parties involved are defined as a supplier and a consumer as defined in the CPA:

“Supplier” – “A person who sells or markets goods or services in the ordinary course of his business for consideration.” and

Consumer” – “A person who receives goods or services from a supplier who sells such goods or services in the ordinary course of his business.”

The CPA will automatically apply to a transaction where a seller is a developer (who’s ordinary course of business is to build and sell residential dwellings).  In this instance the seller will not be able to rely on the voetstoots clause, as the remedies in terms of the CPA will be available to the buyer.

However, in terms of Section 55(6) of the CPA a seller will be able to escape liability for any defects if, at the time of selling the property, the buyer was made fully aware of any existing defects. In this case the onus will be on the seller to ensure that all defects are disclosed to the buyer at the time of concluding the sale agreement.

 

Early occupation and repairs/ alterations

If the agreement of sale does not make provision for early occupation, the conveyancing attorneys will draft an addendum to the agreement of sale to make provision. The buyer shall not be entitled to make alterations and or attend to any repairs of whatsoever nature to the property and subsequently deduct such costs from the occupational rent, unless he/she has received written authorization from the seller entitling him/her to do so and /or unless the agreement of sale states otherwise. Should the buyer attend to repairs on the property without the written authorization of the seller, such account will be for the buyer and the buyer shall have no claim against the seller for latter. It is therefore very important that both seller and buyer familiarize themselves with the terms and conditions of the agreement of sale at the time of signing the agreement to prevent any future disputes and or unnecessary misunderstandings.

 

Various factors that could delay the transfer process

˃ If the buyer’s bond is not approved timeously and extension is given to obtain bond grant

˃ If the property has to be sub-divided before transfer could take place

˃ If the agreement of sale is subject to the buyer selling his /her home

˃ If the seller is insolvent or deceased

˃ If seller and/ or buyer delays in providing the conveyancing attorneys with their Fica documents and any other relevant information they require

˃ If there is a dispute between the seller and the local municipality regarding the rates & taxes/ or a dispute between seller and buyer

˃ If the existing Title Deed is lost

˃ If buying from a deceased estate or an insolvent estate

˃ If the buyer delays in paying the transfer costs and/ or bond costs

Please note: The above list is not exhaustive and may include any other any other factors that could cause unforeseen delays.

 

Transfer duty/ VAT

If the seller is a registered VAT Vendor, VAT will be payable at either 0% or 14% on the purchase price. If the seller is a registered VAT Vendor, no transfer duty will be payable. If the seller is however not a registered VAT Vendor, transfer duty will be payable and will be calculated on the market value or the purchase price whichever is the highest. Both seller and buyer needs to ensure all their tax returns are up to date as this can cause a delay in registration.

Transfer duty rate adjustments for period 2017/2018

Property value (R) Rates of tax
R0 – R900 000 0% of property value
R900 001 – R1 250 000 3% of property value above R900 000
R1 250 001 – R1 750 000 R10 500 + 6% of property value above R1 250 000
R1 750 001 – R2 250 000 R40 500 + 8% of property value above R1 750 000
R2 250 001 – R10 000 000 R80 500 + 11% of property value above R2 250 000
R10 000 000 R933 000 + 13% of property value above R10 000 000

 

While the maximum effective rate of capital gains tax has been increased:

Legal entity 2016 2017
Individuals and special trusts 16.4% 18%
Companies 22.4% 22.4%
Other trusts 32.8% 36%

 

 

COSTS INCIDENTAL TO TRANSFER

Costs for the buyer’s account:

Transfer costs are paid by the buyer and includes, but are not limited to, the attorney’s fee, transfer duty /Vat, buyer’s share of pro-rata levies and/ or rates and all disbursements incidental to transfer (i.e. rates- & levy clearance certificates).

To view the table of cost  please click here

 

Costs for the seller’s account:

˃ Compliance certificate: Electrical, electric fence, gas, beetle(coastal regions), plumbing, water (cape region).

˃ Fica fee

˃ Estate agents commission: Settled directly by Zandberg Attorneys from proceeds on date of registration.

˃ Rates clearance figures: The council normally issues figures 3-4 months in advance. Should there be an issue at council with issuing clearance figures a rates consultant may have to be appointed to assist and resolve the issue

˃ Levy clearance figures

˃ Bond cancellation costs: Irrespective whether your bond has been paid up or not, the bond will have to be cancelled at the deeds office upon registration of the property into the buyer’s name. The bank will appoint cancellation attorneys to attend to the cancellation of the exiting bond and these cancellation attorneys will be entitled to charge a cancellation fee.

˃ Penalties for early cancellation of existing bond: If you intent to sell your property and there is an existing bond registered over the property, such bond will have to be cancelled upon transfer and registration into the new owner’s name. Sellers must remember to give the bank at least 3 months’ written notice of their intention to cancel the bond, to prevent any penalties for early termination.

 

Information required by the conveyancing attorneys:

  • Copy of identity document;
  • Marriage certificate / Degree of divorce and settlement agreement (if applicable);
  • Ante nuptial contract (if applicable);
  • Income tax number;
  • Proof of residence not older than 3 months;
  • Seller to provide the name of financial institution and existing bond account number;
  • Seller to provide the latest rates & taxes statement;
  • Seller to provide the latest levy statement (if applicable).

 

The information and material published on this website is provided for general purposes only and does not constitute legal advice.

We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. Please consult our offices on any specific legal problem or matter.

We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained in these pages.