First-time buyers make up the majority of homebuyers in South Africa, but many enter into the process without a full understanding of what it really entails and how long they should expect to wait – especially when it comes to the legal transfer of the property.
Jackie Smith, Head of Buyers Trust (a subsidiary of ooba Group) shares a step-by-step guide to what buyers can expect once their Offer To Purchase is accepted and before the property is legally registered in her name.
- How Long Does the Home Transfer Process Really Take?
As it’s their first time embarking on this journey, many first-time buyers don’t realise the length of the home transfer process and what it entails. There is a misconception that you are handed the keys as soon as the offer is accepted and the deposit has been securely paid and stored, but in reality, it can take up to three months before you are legally able to move in.
Smith explains that the standard transfer time is 8 to 12 weeks in South Africa. This is because a property transfer involves the legal process of transferring ownership from the seller to the buyer – known as the ‘deed of transfer.’ There are multiple steps involved, which Smith breaks down:
Step 1: Agreement of sale
Before the property transfer can take place, an agreement of sale must be drawn up and signed by both parties.
“An agreement of sale contract typically lays out details such as the property description as it will legally appear, the personal details of both buyer and seller, the purchase price and deposit amount as well as the conditions that the agreement of sale is subject to – for example, the purchasers’ bond being approved,” says Smith.
How long this takes: Anywhere from a few days to a few weeks, depending on how responsive both parties are.
Step 2: Home loan approval
“Buyers will generally shop around for the best home loan interest rate through a bond originator such as ooba Home Loans. Once the home loan has been approved, a bond attorney is appointed to draw up the bond documents for the purchaser to sign,” says Smith.
How long this takes: Between 3-7 working days. The signing of bond documents takes place closer to the lodgement of the transfer in the Deeds Office
Step 3: Conveyancing
A transferring attorney, best known as a conveyancer who is appointed by the seller, will obtain proof of residence and ID documents from both parties, and apply for the seller’s bond cancellation figures. “Once this is completed, the bank sends the original property Title Deed to the bond cancellation attorneys.”
How long this takes: Between 2-4 weeks. This process must be concluded before the lodgement of transfer and the seller must give the bank notice of cancellation within 90 days of cancelling the bond.
Step 4: Signing transfer documents
Once the paperwork is obtained, both parties sign the various transfer documents. The conveyancer will then apply for a clearance certificate from the municipality, confirming that all rates and taxes on the property have been paid for the last two years.
How long this takes: Depending on the efficiencies with the Municipal offices, this process should take no more than 7-10 working days.
Step 5: Pay transfer duty
Transfer duty (a percentage of the purchase price calculated on a sliding scale using ooba Group’s free calculator) must be paid on all existing homes sold for over R1 million. “This tax must be paid by the buyer to SARS, and they will also need to pay the conveyancers fees,” she adds.
How long this takes: Dependent on how long it takes SARS to issue a Transfer Duty receipt
Step 6: Deeds office registration
Finally, the conveyancer lodges all required documentation, including the new bond and the cancellation of the old bond with the Deeds Office. Provided there are no changes, the transaction is registered, and the buyer is the legal owner of the home.
How long this takes: Between 8-10 working days
Hidden costs in the transfer process
Smith emphasises that as this is a lengthy legal process, buyers must budget for additional costs during the transfer process. “Buyers are responsible for the legal fees of the conveyancer, as well as paying the transfer duty to SARS. However, there are also ‘additional costs’ to be paid, including rates payable to the municipality, fees to the relevant banks, guarantees issued and administrative costs incurred in the filing of paperwork”.
“Remember that any delay in paying these fees will only extend the time it takes to transfer the home, so it’s important to have cash on hand.”
What happens if the transfer process is delayed?
There are multiple factors that could cause the transfer to be delayed as there are so many parties involved in the process: SARS; the three different types of attorneys; the municipality; the banks; the Deeds Office and of course the seller. Slow turn-around times can be a source of frustration for buyers, but Smith highlights that there is one silver lining to this:
“If you have paid your 10% or more deposit into an account that generates the maximum amount of interest, as is possible by using a secure third-party alternative such as Buyers Trust, you can rest assured that you will be rewarded for your patience through the interest accrued,” she concludes.