Date

 08/09/2008

Author

Notes

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Date

 08/09/2008

Author

 Rodney Hayter

Notes

 :

(Property Tips) DURBAN (August 08) - There are various costs associated with a transfer of property, some of which are payable by the purchaser and others for which the seller is liable.

An agreement of sale will ordinarily provide that the purchaser is liable to pay the conveyancing costs related to the transfer of a property. These costs are payable prior to registration of transfer and include:

* A fee payable to the conveyancers attending to the transfer of the property, which fee increases as the value of the property increases and which is based on national guidelines recommended by the Law Society of South Africa. This fee is in respect of the general conveyancing work involved in the registration of a transfer in the relevant Deeds Office and relates to the conveyancer’s responsibilities to prepare the documents, control the finances related to the transfer, apply for and obtain the rates certificate and transfer duty receipt, ensure compliance with the terms of the contract of sale, and also to ensure that the documents lodged in the Deeds Office are accurate and conditions of title are correctly brought forward in the title deeds.

* A charge for disbursements incurred and for any postages and petties. It is also usual for the conveyancers to charge a fee for the collection of FICA documents as required in terms of the Financial Intelligence Centre Act No 38 of 2001.

* Transfer duty, which is the tax payable to the South African Revenue Services (SARS) on the transfer of an immovable property. This is required to be paid to SARS prior to lodgement of the transfer in the Deeds Office as SARS issues a receipt which is required to be lodged with the transfer documents in the Deeds Office. If the transaction is one on which VAT is payable, then transfer duty is not payable, and instead an exemption receipt is issued by SARS and lodged in the Deeds Office

* A fee payable to the relevant municipality to obtain a rates assessment on the property and, once the rates have been paid, a rates clearance certificate. This certificate is also required to be lodged with the transfer documents in the Deeds Office.

* A fee is payable to the Deeds Office for the examination and registration of the transfer documents and this fee is also based on the value of the property involved in the transfer.

* Bond registration costs, should the purchaser have obtained a bond in order to finance the transfer. These costs are made up of the conveyancer’s fee, postages and petties, Deeds Office registration fee and any administration charges that the banks impose. These costs are separate from and additional to the costs of the transfer.

The other costs involved in a property transfer are those for which the seller is liable. The estate agents commission is usually paid by the seller as are the costs of obtaining borer and electrical compliance certificates, unless the agreement provides otherwise Further, any charges related to the cancellation of an existing mortgage bond over the property are also for the seller’s account.

-(Today’s Tip by Carla Martin, Senior Associate (Conveyancing Department Garlicke & Bousfield Inc).

Date

 08/09/2008

Author

Notes

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In current economic times, there's no such thing as a friendly banker. Paddy Hartdegen says it's time we face up to reality and get our ducks in the proverbial row.

In the tough economic climate we face at the moment it's essential to understand that there is no such thing as a friendly banker when your bond is in arrears, when you've missed your credit card payments or you've gone over the limit on your overdraft.

When this happens there are only unfriendly bankers.

I'm sure you can remember how they gave you an interest rate concession – one or two points below prime because they wanted your business. Well go into arrears on your bond and you'll realise that concessions have just gone right out of the window. The banks have a clause in their agreement with you that if you are in arrears then the top interest rate becomes payable.

Listen to the estate agents that you deal with. They will tell you that today's buyers want bargains. And they'll tell you too that most of today's sellers are asking too much money for their homes. Economists have already warned us all that house prices will continue to fall and this downward cycle will be with us for at least a year. So accept it rather than fight it.

A Cape Town–based company, the Alliance Group, says that its research indicates that as many as 55 000 homeowners will be under severe financial stress by September this year and may risk losing their homes. They expect that this figure will rise in the final quarter of the year too. The group's chief executive Rael Levitt says his group has developed a new product aimed at providing some relief for cash-strapped homeowners who are able to sell their homes more rapidly through the company's Recovery Auction Programme.

It's probably worth investigating but remember these words: there are no friendly bankers when you are a distressed client who's in arrears or has failed to make a bond repayment. Already the major banks have said that legal action against defaulting borrowers has increased sharply and they, too, expect the number of defaulters to continue climbing until interest rates fall sometime in the future.

So forget relying on the banks, the National Credit Act, debt counsellors or any other advisers to get you out of the mess you're in. It's not going to happen. You have to find your own way out of it and accept that everyone you owe money to is baying for blood.

Don't expect any sympathy either. Banks aren't in the business of helping distressed clients. Depending on your financial standing they might be prepared to refinance your property or they might extend the loan period. But that's about all.

If you've got to sell your home, then get some perspective about the market conditions prevailing today. Estate agents will tell you the truth about actual sales prices and they'll advise you about what a realistic and achieveable price is for the area.

Also, understand before you sell that banks are not granting bonds as readily as they were in the past. They are being cautious now and recent figures show that they are turning down between 40 and 50 percent of all home loan applications they receive.

So guess what, sellers: it's not only the buyers that are making it more difficult to sell your house. The banks are too.

What is a distressed homeowner expected to do?

Here's a realistic perspective:
• Banks are greedy and want their money back. That's all. Forget the nice bank manager who gave you that interest rate concession. He's gone and you're dealing with the collections department or the legal teams.
• If you're financially distressed, sell your house as quickly as possible. Ask a reasonable price for it and accept that the market is in a decline. By refusing to budge on the price you want, you risk losing everything.
• Negotiate with the estate agent or auctioneer over the commission rates they charge. Lower commissions mean more money in your pocket and more money to settle your debts.
• Under all circumstances try to protect the investment you've made in your home. Property is a real asset so get rid of expensive cars, credit cards and any other personal accounts first. Only sell your house as a last resort.
• Keep paying your bond. If you can't pay the full amount pay something anyway. If you have to default on an account, do it on your car rather than your home.

If you have to sell, accept that while you might get less for your property today than you would've got last year, you can buy another property for less than you would have paid last year too. So the ratio between the price you get for your house and the price you pay for a replacement will probably still be very much the same.

Put away the dreams of making handsome profits from your property and consider instead the consequences of having a sheriff knock on your door with an attachment order from your bank. By then it's probably too late to do anything because that 'friendly' banker gives you just 21 days to pay the full outstanding balance on your bond . If you don't pay, they auction your house (usually within six weeks) and claim the outstanding balance from you anyway.

Understand that the banks will always win – that's the way the contracts are structured – so sell if you have to, don't wait until the sheriff arrives.

Most importantly, stop deluding yourself. Don't hide away from the predicament you face and don't pretend that it will "all come right when my next deal goes through". If you are in financial trouble do something to fix it. And be realistic about fixing it because it's a well-known fact that when times are tough, its the banks who get tougher.

Hartdegen writes a regular column for Property24.com. Contact him at paddyhar@telkomsa.net.

Readers' Comments
Have a comment or question about this article? Email us now..

Your following comments cannot be further from the truth:

"So forget relying on the banks, the National Credit Act, debt counsellors or any other advisers to get you out of the mess you're in. It's not going to happen."

"Understand that the banks will always win – that's the way the contracts are structured – so sell if you have to, don't wait until the sheriff arrives."

Let me explain. One of my customers faxed me a summons three days before the attorneys wanted to go to court to obtain a judgment where after they would proceed to obtain an attachment order to attach the property and sell the house on public auction. We advise the person to apply for debt counseling and upon receipt of the application we advised the attorney and the bank involved to stop action in order for us to renegotiate their credit payments to which they agreed with little effort as the consumer received immediate protection against legal action under the National Credit Act. It further is expected that we will also be able to fairly easy obtain their acceptance of our new repayment proposal.

It is clear to me that the majority of people in South Africa do not understand the debt counseling process and I wish that the media will stop making comments before they have not properly investigated the options available to consumers to get out of their debts as credit providers are in the majority of cases prepared to renegotiate credit payments including the home loan payments. They just want their money back and if the debt counseling process is the way to go then they will accept.

Yes, I will be the first to also state that there are consumers where even a debt counselor cannot help but those consumers' accounts for less than 10% of all consumers currently in financial trouble we have provided with counseling and I expect same to be the norm. The quicker a consumer however applies the easier we can get him out of his trouble and one should not wait and try to fight the problem yourself, as rightfully said, banks don't listen.

In the current market it is not as easy to sell one's property which the reasons are well known. It thus remains our, debt counselors, first choice to try and keep the property but yes it could be advisable to try and sell to use the equity available to repay other debts to get the consumer out of his predicament faster.

This morning many people reading your article will feel even more hopeless and many more people might loose their property as they would not even attempt to find out about debt counseling as they are now of the opinion that this process is also useless.

I respectfully now request that our side of the story is also heard and placed in the open so that all consumers can know about the process but also understand their rights to make an informed decision.

I am more than prepared to be interview in this regard so that the record can be set straight again. - Mauritz

Date

 08/09/2008

Author

 P24

Notes

 :

Bond cancellations have taken many a seller unawares. An expert explains how it works.

Purchasing or selling a home and registering a bond can be a stressful and lengthy process, so it helps to know as much as possible about what is involved. Most banks and estate agents have extensive knowledge and are usually willing to assist buyers or sellers with advice and information.

"South African law has very clear and specific property laws and these stringent legal requirements ensure that the correct procedures are followed and completed when a property is purchased or sold," says Tony Ketcher, MD Seeff Properties Randburg. "This also ensures that the property is free of any encumbrance pertaining to a previous owner prior to transfer of the property being registered in the buyers name."

If the seller has a bond registered over the property, it must be cancelled on transfer and the seller is responsible for payment of the conveyancer's fees for cancellation. (Conveyancing describes the legal procedure whereby lawful ownership of immovable/fixed property is changed (i.e. ownership is "conveyed" from the existing owner to the purchaser). The cancellation of an existing bond has to comply with certain legislation as well as the relevant financial institutions' procedures and costs.

"The bank that holds the sellers bond must receive a written request to cancel the bond once the seller has accepted an offer from the buyer," says Ketcher. "Most banks require 90 days notice – failure to do this may result in penalty costs. The 90-day notice period is only waived in the case of a deceased estate, sequestrated estate or in the event that your new bond is with the same bank."

The bank will then will then advise the seller's attorney (the transferring attorney) to attend to the cancellation of the outstanding capital amount and interest, plus any other costs that are required to settle the account.

Ketcher says that generally speaking, there are usually several attorneys involved in the sale of a home: the transferring attorney (appointed by the seller to transfer the property to the buyer's name); the bond attorney (appointed by the bank granting the bond); and the bond cancellation attorney (appointed by the bank cancelling the bond of the seller upon receipt of a guarantee for the amount owing).

There are several costs related to cancelling a bond - the institution will calculate the exact cancellation figure including charges. Bond cancellation fees are governed by the Law Society, which has instituted a minimum fee.

According to the Standard Bank website (http://www.standardbank.co.za), amounts included in the cancellation figures are the month-end balance before cancellation figures; any homeowner's insurance premiums that would have been debited to the bond account in the next three months; any life assurance premiums that would have been debited to the bond account in the next three months; and legal costs, interest, retention amounts and early termination interest if applicable.

After all the documentation has been signed and the costs paid or guaranteed, the transfer, the new bond and cancellation bond documents are lodged in the Deeds Office and after due process, the registration of the property into the name of the new buyer can take place.

"It is also important to remember that if you cancel your bond within the first two years you will have to pay penalty interest," adds Ketcher. "The penalty interest is basically three months worth of interest. If after two years you cancel your bond then there is no penalty payable. This is because, with the cost of funds, a bank only starts making money on a home loan after about two years, depending on the concession rate they have given you. If your rate is high enough, then the bank will only start making a profit after three or four years. You should remember that the money the bank lends to you costs them money. The margin on a home loan is usually very narrow."

Date

 08/09/2008

Author

 Marieke Van Linge

Notes

 :

Many people overlook the need to submit plans and check legalities when they do alterations or renovate their homes.

Relentless interest rate hikes and stratospheric building costs have put the idea of building a dream home out of the reach of most people.

Instead, buying an existing property and renovating it to your liking seems to offer a more cost-effective solution and a better return on investment than building from scratch.

However, the home improvement route comes with its own challenges and pitfalls, which can blow the budget, especially if you run into trouble with your neighbours or the local council.

According to Marguerite van Niekerk, a property law specialist at Herold Gie Attorneys, many people overlook the need to submit plans and check legalities when they do alterations or renovate their homes.

"Building legislation should be the first consideration in planning alterations or improvements, closely followed by careful consideration of the impact of the building on your neighbours," says van Niekerk.

"If, as an owner, you choose to build or renovate without approved plans, a building inspector may serve an order to stop all building work immediately, which if ignored, may lead to the imposition of a fine or even further prosecution and a court order to demolish the structure concerned – a costly exercise!"

"Furthermore, if your plans offend your neighbours, they could dredge up seemingly insignificant objections in order to impede or halt construction."

"All home owners planning to renovate, other than internal renovations which are not structural or need to comply with certain fire regulations, must make an application to the local council for approval of their plans, before commencing work on site."

Whenever the nature of the work involves excavation of land, electricity supply, plumbing and drainage, you must contact your local authority to find out exactly what is required. Renovations such as putting in a pool, a fireplace or erecting a boundary fence all require planning approval.

Van Niekerk advises that the process concerning the approval or rejection of building plans involves the submission of a building plan to the council building plan examiners who scrutinise the plans to determine if all the major and essential requirements, laws and regulations have been complied with. "A copy of the title deeds, a zoning certificate and a completed application form must all accompany the building plans."

"Following this, the council may call upon an applicant to make amendments to the plans before they can be accepted and entered onto the council's electronic register. The Council will then determine the scrutiny fee, which is usually based on the square meterage of the plan."

"The entire process really depends on the complexity of the proposed building plans, which will affect how long it takes to gain approval. An average waiting period is usually six weeks and you would be well advised to phone after four weeks to ask for an update and make sure that they have everything required."

"However," says van Niekerk, "when you submit an application for the approval of building plans, difficulties often arise with the application and/or interpretation of the provisions of the National Building Regulations and Building Standards Act (NBRBSA)."

"Section 7 of this act often causes controversy as it gives the local authority the discretion to refuse a building plan application on the grounds that it could negatively affect neighbouring properties if the area in which the building is to be erected will be disfigured, if the planned building work will be unsightly or objectionable or if it will detract from the value of adjoining or neighbouring properties."

"This is theoretically a good rule to have, especially if one is the neighbour of someone planning to build or renovate. However the applicable provision makes reference to probability and there is no mention of degree – this means that a large amount of discretion must be exercised by qualified people."

According to van Niekerk, this discretion is based on the formulation of an opinion and is therefore very subjective – which adds to the uncertainty surrounding the application of this provision.

"Consequently South Africa has seen an increase in the number of cases appearing before the courts where one neighbour is objecting to the commencement of another's building activities – even though the plans have been through all the relevant channels and have been approved by the local authority."

"In my opinion," says van Niekerk, "the mere fact that neighbours don't like the appearance of a building and postulate that their properties will reduce in value as a consequence, should not be the over-riding reason for the local authority to consider refusing a building plan application."

"Genuine derogation of value would have to be extreme – such as the construction of an iron shack in an upmarket neighbourhood."

"Restrictions on a landowner's right to develop his land are usually to be found in the applicable municipal scheme regulations and title deed conditions."

"My recommendation for any alteration, is to establish the legal requirements upfront and then to resolve any possible issues with your neighbours and the council, before the first brick is laid," concludes van Niekerk.

Date

 08/09/2008

Author

 ChilliBlu Realty & Letting

Notes

 :

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