The costs of transferring ownership in immovable property are borne by the purchaser. If the purchaser is obtaining a loan from a bank to purchase the property, then two registrations take place in the Deeds Office, namely the registration of transfer of the property into the name of the purchaser and the registration of a bond over the property in favour of the Bank. The purchaser is liable for both the transfer costs and the bond costs.
Transfer duty (the tax payable by the purchaser to the Government when property is purchased) normally constitutes by far the largest component of transfer costs. As the purchase price increases, so the gap between transfer duty and the attorney’s transfer fee grows.
The transfer fees charged by attorneys are based on the tariff which is prescribed by the Law Society of South Africa. In addition to the transfer fee there are other incidental costs which are payable by the purchaser, such as disbursements, Deeds Office registration fee, FICA fees and levy clearance certificates in the case of sectional title properties. Purchasers are also normally liable for a pro rata share of the rates and taxes (freehold property) or levies (sectional title property).
Purchasers quite often only budget for the transfer duty and the attorney’s transfer fee and are then surprised when they discover that the abovementioned additional costs are payable. In respect of bond registration costs there are also additional costs payable over and above the bond registration fee payable to the attorney, such as the bank’s valuation and initiation fees, the Deeds Office registration fee and FICA fees. In some instances, purchasers are even unaware that they will have to pay not only transfer costs but also bond registration costs. To avoid surprises, prospective purchasers should ask the estate agent or an attorney to provide them with an accurate estimate of the actual costs that are payable.
Click on the “Cost Calculator” Tab on the Main Menu of our website to accurately calculate transfer and bond costs and bond instalments
In South Africa the system of registration of title to land (ownership) is a complex system which places a great deal of responsibility on the conveyancer (transferring attorney). The processing of the necessary documentation is time consuming and expensive. As a result the cost of transferring property in South Africa is fairly high by comparison to some other countries.
However, the South African system is regarded as one of the best in the world (if not the best) and the advantage of our system is that it provides owners with absolute security of title. In other words, once a person has paid the purchase price for a property and has become the registered owner thereof, his or her ownership of the property is guaranteed unlike in some other countries where the system is less efficient. Transfer costs should accordingly be seen in this perspective.
(Disclaimer: This article is for information purposes only and do not constitute legal or other professional advice)
Website Design and Development by Blaze Media