The process of transferring a commercial property begins once the purchase agreement has been signed by both parties, financing has been secured according to the contract, and the deposit has been paid. Below is a detailed, step-by-step guide to the process that the transfer process will follow:
1. Appointment of the Conveyancer
It's the SELLER's prerogative to appoint the Conveyancer (Transferring Attorney). This is done at the time of signing the agreement of sale. The Conveyancer is a specialist attorney responsible for managing the transfer process from end to end and safeguarding the SELLER’s interests. It is advisable to choose a Conveyancer with expertise in commercial property transfers to ensure a smooth and efficient process. The Conveyancer oversees all aspects of the transaction, including legal compliance and clearance requirements. Abacus DIVISIONS have longstanding relationships with conveyancers that specialises in transfer of Commercial Property and can suggest these to the SELLER.
2. SARS Clearance
The Conveyancer submits transaction details, including the purchase agreement, to SARS (South African Revenue Service) for clearance. SARS determines whether VAT applies and at what rate (e.g., zero-rated, 15% VAT, or transfer duty). This decision depends on various factors, such as the VAT status of the SELLER and PURCHASER, lease agreements, and the nature of the property.
Tax Payment: The PURCHASER must pay the applicable tax amount as assessed by SARS to obtain a SARS Clearance Certificate. The Clearance Certificate is mandatory for the lodgement process to proceed.
3. Homeowners Association (HOA) Clearance (If Applicable)
If the property is within an estate or development governed by an HOA, the Conveyancer requests a clearance certificate from the HOA. This requires:
Payment of outstanding levies for three to six months in advance.
Payment of a clearance fee to the HOA.
HOA clearance is necessary for lodgement.
4. Rates and Taxes Clearance
The Conveyancer applies to the local municipality or City Council for a Rates and Taxes Clearance Certificate. The SELLER must settle the following:
Outstanding rates and taxes, usually covering three to six months in advance.
Additional amounts determined by the municipality.
Once cleared, the certificate is issued for the transfer process.
5. Bond Cancellation (If Applicable)
If the SELLER has a bond registered on the property, the Conveyancer contacts the bank to request bond cancellation figures. These figures include:
The remaining capital balance on the loan.
Interest up to the settlement date.
Potential penalty fees for early settlement.
The SELLER is responsible for settling these amounts to facilitate bond cancellation. The cancelation fees are usually paid out of the proceeds of the sale and the Conveyancer will provide guarantees in this regard to the SELLER’s bank and the bond cancelation attorney appointed by the bank.
6. Transfer Documents
The Conveyancer prepares and ensures the signing of all necessary transfer documents, including:
Power of Attorney to Transfer: Authorising the Conveyancer to manage the property registration.
Transfer Duty Declarations: Submitted to SARS for tax compliance.
Supporting documents (e.g., FICA compliance for both parties).
7. Lodgement at the Deeds Office
Once all clearance certificates and required documents are obtained, the Conveyancer lodges the transfer documents at the Deeds Office. This includes:
The Title Deed of the property.
The SARS Clearance Certificate.
The Rates Clearance Certificate.
The Deeds Office examines the documents for compliance. This process typically takes 7–10 business days.
8. Registration of Transfer
Once the Deeds Office completes the examination, the transfer is registered, and ownership is officially transferred to the PURCHASER. The new Title Deed is issued in the PURCHASER’s name.
9. Settlement of Proceeds
After registration, the Conveyancer settles the proceeds of the sale:
Pays off the SELLER’s existing bond, if applicable.
Pays transfer costs to the Conveyancer for their fees.
Pays and agent commissions.
Pays over the deposits and rent collected in advance to the PURCHASER according to the agreement.
Disburses the remaining balance to the SELLER.
10. Final Steps
Handover: The property keys, lease agreements and legal documents such as plans and occupation certificate are handed over to the PURCHASER.
Confirmation: Both parties receive confirmation of registration from the Conveyancer, completing the transfer process. The PURCHASER is now required to open accounts with the City Council and HOA (if applicable).
This complete and professional process ensures that all legal, tax, and municipal requirements are addressed, providing a smooth and efficient transfer of ownership.