The costs of buying property

Buying and selling residential property is a complex and daunting undertaking with a lot of hidden, or at least unconsidered, costs.

This week, Garlicke & Bousfield conveyancing department director Victoria Hodgon answers some of those nagging questions to help you with your property transactions.

How and what are conveyancing attorneys paid?

Conveyancing fees for a transfer are based on the purchase price of the property to be transferred, and conveyancing fees for a mortgage bond are based on the amount of the mortgage bond to be registered.

The fees are calculated in accordance with the national guidelines recommended by the Law Society of South Africa.

The fees must be paid when requested by the conveyancers who are attending to the matter. A sale agreement usually provides that the purchaser must make payment within a specified period, for example, seven days of request by the conveyancers.

These fees should be "all-inclusive" and there should be no separate charges for time spent attending to registration, correspondence, preparation of documents or attending to financial aspects.

What transfer duty can I expect to pay, how is it paid and what happens if it isn't paid on time?

The current transfer duty rates were announced in the latest national budget. They are applicable to both individuals and legal persons (companies, close corporations and trusts) for sale agreements concluded on or after February 23 2011.

Transfer duty is payable within six months of the date of acquisition (which is the date on which the transaction was entered into, irrespective of whether the transaction was conditional or not, in other words, the date of the last signature of the sale agreement) and is payable by the purchaser.

The conveyancers will calculate the transfer duty payable and request payment from the purchaser, together with the transfer costs.

On receipt of payment from the purchaser, the conveyancers will pay the transfer duty to SARS when submitting the application for the transfer duty receipt. SARS will not issue the transfer duty receipt unless they have received payment of the transfer duty.

If any transfer duty remains unpaid after the expiration of the six-month period, interest will become payable at 10% per annum of the amount of duty which remains unpaid, calculated for each completed month in the period from that date to the date of payment.

If SARS is of the opinion that the purchase price is less than the fair value of the property, it may determine the fair value of the property and the transfer duty payable.

In our experience, this does not happen often - the situation is likely to arise when there is a large discrepancy between the consideration payable and the municipal value of the property.