Important Costs to Know About, When Buying or Selling Your Property

Selling your sectional title unit or full title home in a homeowners association may have many aspects that you may not know about, and which may cause questions and sometimes unnecessary conflict and costs.

Clearance figures have to be obtained by the transfer attorneys for levies, municipal accounts, and often insurance certificates. You, as the seller, will also have to provide COC’s (Certificate of Compliance)  for electricity and gas (if you have gas installations with large gas cylinders). In some instances, even COC’s for the electric fence of the community scheme!

A lot of confusion and conflict arises about who is responsible for what costs, and I will give a brief overview to try and clear up the confusion which is often shared by estate agents, the attorney’s staff (and even some attorneys!), and the parties to the contract.

The contract usually states that transfer costs will be for the account of the buyer. These costs are specified for the transfer of the property into the name of the buyer, the registration of the bond, transfer duty (tax) (where applicable), and the attorney’s fees.

However, the seller has a duty to provide certain information and evidence, which will be for his cost. The items named in the second paragraph, are the responsibility of the seller (except if specifically altered in the contract). The expensive side of this is that clearance figures have to be for a future date, well outside the date that the expectation is for registration (otherwise a new clearance certificate has to be obtained, which will incur additional costs).

The effect is that levies are paid largely in advance, to a  date that may well be three to six months into the future. The seller is responsible for the levies and the cost of the clearance certificates!  The clearance certificate issued by the managing agent, (and the one by the municipality) must keep the body corporate (or municipality) covered against any possible losses that cannot be recovered after registration into the name of a new owner.

When registration occurs, the transferring attorneys distribute the costs between the parties, in accordance with that date. That is the date that occupation rent, received or receivable is finally calculated and often the levies are also done in the same way. This is where the problems arise! If they don’t know what they are doing, costs will be allocated to the wrong party, or someone may pay for something he has already paid for!

As soon as the managing agents are informed of the registration date and details of the new owner, a new account is created for the new owner. His account will be debited for levies from that date forward. The levies received in terms of the clearance certificate should always cause a credit on the old account (the seller), which will be returned to him when bank details, etc. are received. (Sometimes there are a waiting period for the sake of security)

If the attorneys do the calculations and divide the levies between the two parties, the natural and correct allocation by the managing agents may cause the wrong party to pay for some of the levies. If the attorneys inform the managing agent, of how they made the division, the managing agent can then on their side allocate levies to the correct party. Important: If you know who is responsible for what, you can check that it is done correctly!

It is important to note that there should always be a credit owing to the seller after registration, whether levies or property rates at the municipality! 

Hopefully, somebody will benefit from this knowledge! As the content of these newsletters is published on our website: www.jotam.com you should be able to get it there, when you need it in the future!