How to avoid the potential costs of property transfer delays

Property transactions can be complex enough without the additional frustration of potential cost of delays. Although some delays cannot be foreseen, it is possible to significantly reduce this risk by doing your homework and ‘having your ducks in a row’.

According to Grahame Diedericks, Manager Principal in Midrand for Lew Geffen Sotheby’s International Realty, there are essentially two primary types of delays: “the first relates to the confirmation of the sale and those that occur once the sale has been confirmed and hold up the transfer”.

Once the potential minefield of multiple complex steps, reams of documentation, along with suspensive conditions and contractual obligations has been successfully navigated, and the deal is finally done, many people breathe a sigh of relief. But the deal isn’t quite done and the expected downhill cruise to transfer can still become an uphill battle”.

Diedericks explains that one of the main reasons for delayed transfers is that the timeline is out of sync, especially when two or more delas are linked and money from one sale is needed to purchase the next property and so on.

This can also occur if buyers haven’t budgeted correctly for the transfer costs of the new property they are buying or if they have an access bond in place on their current home, in which case, when the attorney calls for a bond cancellation, that bond account will be frozen, and they will not be able to access the funds”.

He adds that another common oversight is not giving the required 90 days’ notice of cancellation on the existing bond which will not only cause delays but will also incur avoidable late cancellation fees.

If a homeowner is seriously thinking about selling, they should give notice to the bank holding the bond, he advises.

In doing so, they are not committing to selling, they merely notifying the bank of the possibility and they can keep on renewing the cancellation if they do not sell timeously or they can revoke the notification if they change their minds”.

Cobus Odendaal, CEO of Lew Geffen Sotheby’s International Realty in Johannesburg and Randburg, says that although hiccups and stumbling blocks can occur during any stage of the transaction, they most commonly occur during the following stages: bond approval; bond cancellation; the signing of transfer documents; obtaining valid compliance certificates; issues encountered at lodgements requiring the removal of notes by the Registrar of Deeds; transfers which are unusual and more complex such as estate transfers which require an endorsement of the Master of the High Court.

Most of these delays can easily be avoided through good communication and prompt cooperation with the transferring attorney and agent or, if they are outside of South Africa, by giving a valid power of attorney to a person within South Africa who can sign the necessary documents and act on their behalf.

One of the transferring attorney’s key roles is to coordinate and control all the role players involved in a transfer, including SARS (for transfer duty), the municipality (for rates clearance certificates) and the bank”.

And, to coordinate the process as seamlessly as possible, it is essential that both the buyer and seller submit all the necessary documentation in time, as per the legal requirements and without omissions. This is especially important if either party resides in another country or is otherwise difficult to contact for information and signatures”, says Odendaal.

He says that it is also vital that clients are completely up front with agents regarding their financial situation from the onset.

We can then facilitate and expedite the process by having our bond originator prequalify them and the thorough credit check will reveal any potential snags”.

This step is particularly important for buyers who are self-employed as banks are very strict about the documentation that they require for a bond application.  At this stage I also advise clients to avoid making any expensive purchases that could negatively impact their affordability.” 

An experienced estate agent will be able to guide their clients every step of the way and, as long as they are upfront with their realtors, there should not be too many problems to circumvent”.  

And, as the transferring attorney and agent work closely together behind the scenes to ensure a smooth transfer, it’s always an advantage if they already have an established working relationship” he concludes.