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Buying a house for the first time? These are the various legal stages on that route

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Most aspiring homeowners embark on the property buying journey with little idea of the route, the stops along the way, and the different role players necessary to help them proceed.

Conveyancing attorneys are among the crucial gatekeepers many buyers do not know much about, yet they are responsible for the legal transfer of property from one owner to another. They prepare the deeds and documents to transfer the property as well as have the sale registered with the Deeds Office.

And they, like other parties in the process, need to be paid. In fact, just who needs to be paid – and by whom – is another thing many first-time buyers do not understand. But this is only one of many misunderstandings and misconceptions buyers have about the process, say attorneys.

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Micaela dos Santos, senior associate at Adams & Adams Attorneys, says the source of many buyers’ misconceptions is the guidance and advice they receive from relatives and/or friends who have purchased property.

“However, as experience dictates, no two transactions are identical and each poses its own unique conditions and hurdles.” Know, and choose, your conveyancers Dos Santos says many buyers mistakenly believe that the conveyancer represents the best interests of the seller but this is not the case.

“The conveyancer is there to execute the transaction in accordance with the sale agreement for the benefit of all the parties involved.” Louis Kruger, director at Kruger Attorneys & Conveyancers, says while sellers typically nominate the conveyancer who will attend to the transfer, this is customary and not law.

“The purchaser may nominate their own conveyancers as a term of the agreement.” Simonne Nurse of CWN says while the seller usually gets to choose the conveyancer, parties should have open discussions as to which conveyancing firm would be best as the buyer pays the conveyancing fees.

She adds: “Conveyancing is a highly specialised field so choose wisely. Your estate agents don’t have the information that a conveyancer does.” Transfer fees vs transfer duty – plus bond costs Nurse often finds that first-time purchasers do not realise that there are separate costs and conveyancers for the transfer of the property and the bond agreement. There are also misunderstandings around transfer duty and the varying amounts levied by Sars.

“Purchasers also don’t understand that, over and above the conveyancing costs, the banks levy an initiation fee which has to be paid by the purchasers.” Echoing this, Kruger says many buyers do not realise that they have to pay both the conveyancing and the bond costs, and often budget only for one or the other, and not both.

“There are typically two different firms of attorneys involved in each transaction where mortgage finance is utilised. Bond costs are payable to the conveyancers nominated by the purchaser’s bank granting them the bond.”

He advises buyers to obtain quotes from the bond and transfer attorneys before completing an offer to purchase. Dos Santos says purchasers often confuse transfer fees and transfer duty. “Currently, transfer duty is payable on property acquisitions where the value of the property exceeds R1 million.”

It takes time for a transfer to be registered The fact that the transfer process can take longer than expected is another common buyer misconception, says David Campbell of Meumann White Attorneys. This is mainly due to the fact that purchasers, generally, are not aware of how many different role players are involved in the process of transferring a property.

Also, conveyancers require all the role players to “operate efficiently in order for a registration to proceed smoothly”. “While, as conveyancers, we try to give an estimated date of transfer, it cannot be stressed enough that this is simply an estimate. We would try to stick to it as closely as possible but this is not always realistic given the other role-players involved in the process.”

Echoing this, Maryna Botha, director of STBB, says it is important to remember that when an instruction reaches a conveyancer – to register transfer – that is the signal of the beginning of the process for the attorneys.

“But, by that time, it might be the end of a long process of property hunting and negotiation on the part of the buyer. For the buyer, by the time of signatures on the offer to purchase, the process feels ‘done’, and they often cannot fathom why there is another six to eight weeks to wait before transfer.

“To them, it feels immediately that there is delay and incompetence because there is a further perceived waiting period.”

Snag lists

Buyers also mistakenly believe that they are entitled to provide the sellers with a snag list of items to be repaired or renovated before they proceed with the purchase, says Kruger. However, while the process of purchasing a property from a developer may offer opportunities for a snag list, this is not applicable to the re-sale of residential properties by individuals. Buyers have a duty to inspect the property before they complete an offer to purchase.

“Even though there is an onus on the seller to disclose any latent defects – those defects which cannot be seen in a reasonable inspection of the property – the seller is not obliged to disclose patent – obvious – defects. The purchasers must make a thorough inspection of the property to avoid any future pitfalls,” he says.

Independent attorneys

Buyers can have an independent attorney look over the agreement on their behalf and advise them regarding the contents but many do not know this, Campbell says. “Purchasing a property is a huge investment and so a certain amount of due diligence on the part of the purchaser is recommended. “Inspect the property thoroughly and ensure that you understand the contents of the agreement before signing it. “There is nothing wrong with having an independent attorney advise you prior to signing the agreement as, once you have signed, it is too late to make unilateral changes should an issue arise.”

Reasons for walking away from an agreement

“For the man in the street, the principle of being bound to a contract, come what may, is difficult,” Botha says. “They think that if their circumstances change, for example, they lose their job, it entitles them to walk away from a signed agreement. It does not.” In addition, Meyer de Waal, director of MDW Inc, says buyers also incorrectly believe that a signed offer to purchase is not yet a legal and binding agreement and that a further sale agreement will be prepared for them to sign. This is not so.

Life insurance

When it comes to securing a loan and ultimately registering a mortgage bond, Dos Santos says it a common misconception that a life insurance policy is compulsory. However, although it is true that the approval of a loan may be made subject to a life insurance policy being put into place, this is not a hard and fast rule.

“It remains within the lender’s discretion to impose such a requirement and this will be determined based on the client’s unique profile. However, it is indisputable that a life insurance policy is of great value and it is advisable for a prospective buyer to obtain a life insurance policy to settle the bond in the event of the purchaser’s death.”

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