Understanding Property Transaction Fees: What Purchasers and Sellers Need to Know
Understanding Property Transaction Fees: What Purchasers and Sellers Need to Know
Buying or selling a property involves more than just the purchase price or the proceeds you receive from a sale. There are various fees and costs associated with the transaction that both purchasers and sellers need to be aware of to avoid any surprises. Here is a breakdown of the fees payable when buying or selling a property in South Africa:
Seller’s Responsibilities:
1. Bond Cancellation: If the property has an existing bond, the seller is responsible for paying off the outstanding amount. This includes any early settlement penalties that may apply.
2. Bond Cancellation Attorney’s Fees: The seller is also responsible for the fees charged by the bond cancellation attorney for cancelling the existing bond registered over the property.
3. Property Practitioner’s Commission: If the property was sold with the assistance of a property practitioner, the seller is liable to pay the property practitioner’s commission. This is typically a percentage of the sale price and is negotiable.
4. Levy Clearance Figures: If the property is part of a sectional title scheme, the seller needs to pay levy clearance figures as received by the body corporate or managing agents.. This figure represents any outstanding levies owed by the seller as well as provision for 2 – 3 month’s levies in advance. The transferring attorneys will do a pro rata calculation on the date of registration and the purchaser will be liable for the pro rata amount from the date of registration.
5. Homeowners Association Clearance Figures: If the property is in a residential estate or complex with a homeowner’s association, the seller needs to pay clearance figures to the association. These figures will also include any outstanding amounts owed as well as provision for 2 – 3 months in advance. The purchaser will also be liable for the pro rata amount from the date of registration.
6. Municipal Clearance Figures: The seller is also liable to pay the municipal clearance figures from the local authority. Once payment of the figures is made the transferring attorneys will receive a clearance certificate, indicating that all municipal rates and taxes are up to date.
7. Compliance Certificates: The seller needs to provide certain compliance certificates to the purchaser, including an electrical compliance certificate (COC), a gas certificate (if applicable), and an electric fence compliance certificate (if applicable). These certificates ensure that the property meets certain safety standards.
Purchaser’s Responsibilities:
1. Transferring Attorney’s Fees: The purchaser is responsible for paying the transferring attorney’s fees. These fees cover the transfer of ownership of the property from the seller to the purchaser.
2. Deeds Office Fees: The purchaser needs to pay fees to the Deeds Office for the registration of the property in their name.
3. Transfer Duty: Transfer duty is a tax payable by the purchaser to the South African Revenue Service (SARS) and is calculated on the value of the purchase price of the property. However, certain properties may be exempt from transfer duty, such as properties valued below a certain threshold or if VAT is payable.
4. Bond Registration Attorney’s Fees: If the purchaser is obtaining a bond to purchase the property, they are responsible for paying the bond registration attorney’s fees.
5. Pro Rata Levy Clearance Figures: The purchaser needs to pay a portion of the levy clearance figures paid by the seller, calculated on a pro rata basis from the date of registration.
6. Pro Rata Homeowners Association Clearance Figures: Similar to the levies, the purchaser needs to pay a portion of the homeowners association clearance figures paid by the seller.
7. Initiation Fee to the Bank: If the purchaser is obtaining a bond, they may be required to pay an initiation fee to the bank. This fee covers the administrative costs of setting up the bond.
8. Occupational Rent: if the purchaser wishes to occupy the property before the date of registration, the purchaser is liable to pay occupational rent to the seller.
It’s essential for both purchasers and sellers to factor in these fees and costs when budgeting for a property transaction this will help navigate these complexities and ensure a smooth property transfer.