Obtain a rates clearance certificate from the City of Johannesburg’s Revenue Department
Agency: Municipality (City of Johannesburg’s Revenue Department)
The transferring conveyancer obtains a rates (taxes) clearance certificate from the local authority, on behalf of the seller only if in Johannesburg. Section 118 of the Local Government: Municipal Systems Act, 32 of 2000 states that any transfer of property must be accompanied by a rates clearance from the local authority. However, the local authority will only check the last 24 months as this is sufficient for the transfer to legally take place. If any taxes are owed from previous years, the seller is not exonerated, and the taxes will still have to be paid by either the seller or the new owner as per agreement. The municipality will issue a figure to be paid by the seller containing rates for rights and taxes, water, sewage and electricity. Once the seller pays this figure, the Municipality will issue the rates clearance certificate. The certificate is valid for 60 days from the date of its issue in terms of Section 118 (1A) of the Local Government: Municipal Systems Act, 32 of 2000.
The Constitutional Court (in Jordaan v City of Tswane Metropolitan Municiplaity [2017] ZACC 31) has clarified that even though section 118(3) of the Local Government: Municipal Systems Act creates a limited real right in favor of the local authority in respect of historic rates and taxes, outstanding amounts cannot be recovered from new property owners, who has no connection to the debt.
Some conveyancers hire rates clearance agencies to obtain rates clearance figures and rates clearance certificates on their behalf. The cost of instructing an agent ranges between ZAR 800- ZAR 1,200.00.
Time and cost: 11 days, ZAR 248.03
The conveyancer prepares and collects all the required documentation
Agency: Companies and Intellectual Property Commission
The conveyancer obtains power of attorney, appointing him/her to appear before the Registrar of Deeds. The conveyancer’s services are mandatory for the registration and transfer of land in South Africa. A conveyancer is an attorney authorized under the Attorneys Act, 53 of 1979 to perform specialized duties regarding the conveyance of immovable property. The Deeds Registries Act, 47 of 1937 authorizes only conveyancers to prepare deeds of transfer, and thus the conveyancer is legally liable for certain facts set out in the deed and other documents. Conveyancing fees, which depend on the property value, are recommended by the Law Society. The Conveyancing Fees Guidelines as from May 2017 are available at: http://www.lssa.org.za/upload/Conveyancing%20Fees%20Guidelines%201%20May%202017.pdf and http://www.ghostdigest.com/articles/conveyancing-fees-may-2017/55272. The cost of this procedure is included in procedure 7, where the Conveyancing Fee Guidelines are applied.
The conveyancer prepares the sales deed and carries out due diligence to identify charges and liabilities affecting the property or the parties to the transaction.
Conduct a company search at the Companies and Intellectual Property Commission Office to ascertain the directors of both companies.
All conveyancers have access to this authority via the Internet and can perform the check online. Usually conveyancers will also ask clients to provide the requisite documents. In so doing, the conveyancer will:
- Review the companies’ memorandum and articles of association to confirm the authority to acquire and alienate immovable property. The founding documents of the seller will be the Memorandum and Articles of Association. If the buyer company was formed before May 1, 2011, its Memorandum and Articles of Association will be examined. If the buyer company was formed after May 1, 2011, only its Memorandum of Incorporation will be examined.
- Review the necessary resolutions. Section 115 of the Companies Act 71 2008 states that a company may not dispose of all or the greater part of its assets except through a special resolution.
- Ensure compliance with the Financial Intelligence Center Act by obtaining proof from the companies of the physical/business address and the Tax/VAT registration number with the South African Revenue Services. The conveyancer will also request this information from the clients before proceeding, and the check is done automatically at the time the transfer duty is paid. If a company does not have or quotes an incorrect Tax/VAT number, it will be unable to pay the transfer duty, and the process will come to a halt.
Additionally, the conveyancer would request a zoning certificate at the Municipality (the information sheet is free) for ZRA 250. The certificate contains information on the township scheme, any amendments, height coverage, floor/area ratio, parking sq. meters, map diagram. This information can also be consulted directly with the town planner.
Furthermore, the conveyancer would check whether the companies are insolvent. The verification is carried out online (at CIPC) and takes 10 minutes. The website would show “interdict” if the company has been liquidated or sequestrated. If the company were to be in this situation, the conveyancer should obtain an endorsement before proceeding to register the property transfer.
Time and cost: 10 days, included in Procedure 6
Obtain an electrical compliance certificate
Agency: Certified electrician
This certificate is not required by the Deeds Office. Section 22 of the Occupational Health and Safety Act, 85 of 1993 makes it mandatory for anyone who wants to sell anything that includes electrical wiring to have an Electrical Certificate of Compliance. It is common practice for the seller to obtain in. However, there will always be a clause in the sale agreement that refers to the Act, who should obtain it and who bears the cost. The certified electrician must be registered with the Department of Labor. There are no fee guidelines, the fees are market driven.
According to section 7-5 of the Electrical Installation Regulation, the certificate cannot be older than 2 years (it is also not valid if there has been any change in the electrical system).
Time and cost: 7 days, ZAR 1,250 (ZAR 1000- 1500)
Obtain a transfer duty receipt from the South African Revenue Services
Agency: South African Revenue Services
The transferring conveyancer obtains a transfer duty receipt/exemption certificate from the South African Revenue Services. Transfer Duty is a tax levied on the value of any property acquired by any person by way of a transaction or otherwise.
As of February 23, 2011, the distinction drawn in calculating the transfer duties for legal entities and natural persons has been abolished. Both legal entities and natural persons now pay the transfer duty based on a sliding scale.
The transferring conveyancer applies for the transfer duty receipt online through the eFiling system (www.sarsefiling.co.za) or through licensed third-party software which integrate with eFiling. SARS electronically requests the conveyancer to upload the deed of sale on the system. Most of the time, the transfer duty figures are issued within two days and the transfer duty receipt is electronically issued upon payment.
In some cases (and especially when the property is exempt from paying the Transfer Duty), South African Revenue Service electronically requests the conveyancer to upload supporting documents to the system for further examination, which takes 7 working days, on average. Should a payment be required, the transfer duty figures are issued for payment and electronic issuance of the transfer duty receipt. After payment, SARS issues the transfer duty certificate. Otherwise, the exemption certificate is electronically issued after further examination.
The scale for the transfer duty was changed for properties acquired on or after March 1st, 2017. The current scale is as follows:
- ZAR 0 to 900,000 – exempt;
- ZAR 900,001 to ZAR 1 250,000 3% on value above ZAR 900,000 but not exceeding ZAR 1 250,000;
- ZAR 1 250,001 to ZAR 1 750, 000 – ZAR 10,500 + 6% on value above ZAR 1 250,000 but not exceeding ZAR 1 750,000;
- ZAR 1 750,001 to ZAR 2 250, 000 – ZAR 40,500 + 8% on value above ZAR 1 750,000 but not exceeding ZAR 2 250,000;
- ZAR 2 250,001 to ZAR 10 000, 000 – ZAR 80,500 + 11% on value above ZAR 2 250,000 but not exceeding ZAR 10 000,000;
- ZAR 10 000 000 and above – ZAR 933,000 + 13% on value above ZAR 10 000,000.
The fees are published on the South African Revenue Service website and are available at: http://www.sars.gov.za/Tax-Rates/Pages/Transfer-Duty.aspx.
Time and cost: 2 days, ZAR 279,609.36
- 0 – 900 000: 0%
- 900 001 – 1 250 000: ZAR 3% on the value above 900,000
- 1 250 001 – 1 750 000: ZAR 10,500 + 6% of the value above 1,250,000
- 1 750 001 – 2 250 000: ZAR 40,500 + 8% of the amount above 1,750,000
- ZAR 2 250 001 – 10 000 000: ZAR 80,500 + 11% of the amount above 2,250,000
- ZAR 10 000 001 and above: ZAR 933,000 +13% of the value exceeding 10,000,000
The conveyancer conducts a title search and checks encumbrances on the property at the Deeds Registry
Agency: Deeds Registry
The conveyancer performs a title search using a licensed third-party software (e.g., GhostConvey, WinDeed, Korbitec, WinDeed, Searchworks, etc.) to ensure that the property exists and that the seller is the rightful owner. The search can also be conducted using the Deeds Registry’s own platform, DeedsWeb (http://www.deeds.gov.za/ITSODeedsWebB/deedsweb/welcome.jsp). DeedsWeb’s coverage is countrywide, and a user can access information on any property throughout the country.
A small number of conveyancers still conduct the search in person, but the majority has a subscription to a third-party software used for searches. The small fee associated with this procedure is included in the conveyancer’s fees.
Time and cost: Less than 1 day (online), included in procedure 6
Parties sign all the documentation at the conveyancer’s office
Agency: Conveyancer’s office
The parties bring all original documentation already sent for purposes of preparation of the conveyancing, and the conveyancer makes certified copies. The conveyancer will collect all the documentation signed by the seller and the purchaser and obtain guarantees for the purchase price. The documents to be signed by the parties are as follows:
- Seller
- Power of attorney to pass the deed and Instruction to Register
- Transfer duty declarations
- Affidavits (Companies; Solvency; Financial Intelligence Centre Act (FICA))
- Purchaser
- Transfer duty declarations
- Affidavits (Companies; Solvency; FICA)
The conveyancing fees, which depend on the property value, are recommended by the Law Society of South Africa. The Conveyancing Fees Guidelines as from May 2017 are available at: http://www.lssa.org.za/upload/Conveyancing%20Fees%20Guidelines%201%20May%202017.pdf and http://www.ghostdigest.com/articles/conveyancing-fees-may-2017/55272.
Time and cost: 1 day, ZAR 40,815
According to the Conveyancing Fees Guidelines published by the Law Society:
- ZAR100,000 or less: ZAR 4,800
- Over ZAR 100,000 – including ZAR 500,000: ZAR 4,800 plus ZAR 735 per ZAR 50,000 or part thereof above that
- Over ZAR 500,000 – including ZAR 1,000,000: ZAR 10,680 for the first ZAR 500,000 plus ZAR 1,470 per ZAR 100,000 or part thereof above that
- Over ZAR 1,000,000 – including ZAR 5,000,000: ZAR 18, 030 for the first ZAR 1,000,000 plus ZAR 735 per ZAR 100,000 or part thereof above that
- Over ZAR 5,000,000: ZAR 47 430 for the first ZAR 5,000,000 plus ZAR 370 per ZAR 100,000 or part thereof above that
The conveyancer lodges the deed at the Deeds Registry
Agency: Deeds Registry
The conveyancer registers the deed with the Deeds Registry. The Registrar compares the draft deed with data in the register. Three different persons with gradual levels of seniority will examine the deed. The deed is examined to (1) ensure compliance with the conditions of transfer, (2) check the legality of the transfer, and (3) verify that the proper standards of examination were applied. Once the criteria are met, the deed is prepared for registration and execution. The conveyancer first signs the deed at the Deeds Registry in front of the Registrar or his/her authorized deputy. The deed is then executed by the signature of the Registrar or his/her deputy. Transfer of ownership officially occurs upon the Registrar signing the deed. The registration fee is then paid. It varies depending on the value of the property and the scale is published in the Government Gazette. The updated fee schedule as from April 2017 is available at: http://www.ghostdigest.com/articles/schedule-of-fees-april-2017/55235. In Johannesburg, most of the conveyancing firms have an account with the Deeds Registry and receive monthly invoices instead of paying separately for each property registration. The Deeds Registry staff members subsequently update the register, scan the deed and retain a scanned copy. The hard copy is handed back to the conveyancer once the deed has been scanned.
Time and cost: 11 days, ZAR 1,846
Deeds Office fees are to increase from 1 July 2018 as published in the Government Gazette of 31 May (No. 41669, Notice No. R.557). These include increases for the registration of transfers and bonds according to the Schedule of Fees of Office as prescribed by regulations 84 and 86 of the Deeds Registries Act No 47 of 1937.
The fees for registering a transfer and a bond are as follows:
- A transfer of which the purchase price / value of property, whichever is the greater
- Item R
- Does not exceed R100 000: 36,00
- Exceeds R100 000 but does not exceed R200 000: 78,00
- Exceeds R200 000 but does not exceed R300 000: 486,00
- Exceeds R300 000 but does not exceed R600 000: 606,00
- Exceeds R600 000 but does not exceed R800 000: 852,00
- Exceeds R800 000 but does not exceed R1 000 000: 978,00
- Exceeds R1000 000 but does not exceed R2 000 000: 1 098,00
- Exceeds R2 000 000 but does not exceed R4 000 000: 1 522,00
- Exceeds R4 000 000 but does not exceed R6 000 000: 1 846,00
