It is common knowledge that the purchaser is responsible for the payment of the transfer costs and bond registration costs (if applicable) during the transfer process. However, as the seller, you will also be liable for costs during the transfer process.
Estate Agent’s Commission
An estate agent charges commission on the sale of any property, and it is usually expressed as a percentage of the purchase price, but it can also be for a set amount. However, commission usually excludes VAT, except if determined otherwise in the sale agreement. VAT is currently charged at 15% for sale agreements concluded after 1 April 2018. The estate agent’s commission is paid only when the property is registered in the purchaser’s name. Therefore, the transferring attorneys (conveyancers) will pay out the net proceeds of the sale to the seller after deducting the commission and bond amounts (see below). The estate agent’s commission is most likely the biggest cost payable by the seller.
Bond and Bond Cancellation Costs
Besides having to settle the outstanding bond amount if there is an existing bond registered over the property, a bond cancellation attorney will have to formally cancel the registered bond before the property can be transferred to the buyer. It is further important to note that the bond will have to be cancelled even if the bond amount has been paid in full prior to the sale of the property. The bond cancellation and the transfer of the property can be done simultaneously. If the transferring attorneys are on the specific bank’s panel of attorneys, they can also request to act as the bond attorneys. Bond cancellation costs are payable on transfer and, therefore, no advance cash payment is necessary by the seller.
Most banks require 90 days’ written notice of a seller’s intention to settle the full bond amount and cancellation of the bond. If you decide to sell your property, make sure that you give your bank the required notice beforehand. Penalty interest is extra interest payable on the outstanding balance of your bond. You will only be able to cancel the bond and transfer the property after the 90 days have expired, otherwise the bank may charge you a penalty fee for cancelling your bond early. This fee is calculated pro rata depending on the date of registration of transfer and simultaneous cancellation of the bond, which can be a substantial sum to pay unnecessarily. However, some banks won’t charge penalty interest if you will be registering a new bond with them on another property simultaneously with the sale of your current property.
Before a property is registered in the purchaser’s name, various compliance certificates are required. If applicable, the seller is responsible for the costs for electrical, beetle, electric fencing, gas, and plumbing compliance certificates. In some instances, sellers are also required to pay for the necessary work to be done before the certificate can be issued.
An Electrical Certificate of Compliance (ECOC) is valid for a period of two years according to current legislation. If the seller has an ECOC that is older than this, or any electrical alterations have occurred during the applicable two year period, the seller will be required to obtain a new ECOC by enlisting the services of a certified electrician.
If a homeowner has opted to install electrical fencing as a security measure, an Electrical Fence System Compliance Certificate is now also required where applicable. It is important to note that an ECOC and Electrical Fence System Compliance Certificate are two separate and different documents.
Another certificate which might be applicable to the transfer is a Beetle (entomological) certificate. This certificate is to confirm that the wood in the property hasn’t been infested by beetles and is usually only needed if your house is at the coast. While not compulsory, homeowners who are selling their property in the Western Cape and KwaZulu-Natal regions will generally need to provide the purchaser with a beetle-free certificate.
To confirm that the gas lines are safe, and only needed if there are gas appliances in the house, homeowners will be required to obtain a Gas certificate of conformity, which indicates that the installation has been done by a qualified technician.
A Plumbing certificate confirms that the plumbing is sound and is only required in Cape Town.
Inspections will have to be conducted by contractors for these certificates to be issued. These inspections normally take place only after any other conditions in the sale agreement (such as the purchaser obtaining bond approval) have been fulfilled. If there is work needed to be done to achieve compliance, then the contractor will give a quote for it. It is the seller’s responsibility to arrange and pay for the inspections and any remedial work that may arise, but often the contractor will be happy to delay receipt of payment until transfer takes place.
Rates and Taxes Clearance Certificate
The conveyancers will require a rates and taxes clearance certificate from the local municipality, and the seller will need to pay upfront to get this certificate. To provide the clearance certificate, the municipality can ask between two and six months of payments in advance, as well as all outstanding rates and taxes. If the property transfer registers within a shorter timeframe, the municipality will refund the seller the additional amount paid.
Levies Clearance Certificate
In the instance where a property is situated within an estate or sectional title scheme, similarly to the rates and taxes clearance certificate, the homeowners’ association or body corporate may request that the seller pays for their levies a few months in advance to ensure these costs are covered until transfer takes place. The homeowners’ association or body corporate will in any event not consent to the transfer of the property if there are any outstanding levies owed to them by the seller.