Navigating the Unseen Expenses When Selling a Home
Who covers the legal expenses when selling a house in South Africa? Typically, it is the buyer who is responsible for paying the lawyer fees associated with the property transaction. These fees primarily include the transfer fees paid to the conveyancing attorney who manages the process of transferring the property into the buyer's name. However, there are exceptions, such as bond cancellation fees, which the seller must bear if they have an existing mortgage that needs to be terminated.
Here is an outline of the legal fees involved in a property sale in South Africa:
1.
Transfer Fees: These fees are usually paid by the purchaser to the conveyancing attorney, even though the seller selects the transfer attorney.
2.
Bond Cancellation Fees: If the seller has a mortgage that needs to be cancelled as part of the sale, they are responsible for covering these costs.
3.
Bond Registration Attorney: If the buyer requires a home loan and needs to register a bond on the property, they are responsible for paying the fees to the attorney handling the registration, typically appointed by the lending bank.
From the seller's perspective, their primary responsibility is to appoint the conveyancing attorney, with the buyer generally covering this expense.
It is crucial to differentiate between transfer fees and transfer duties, as they are distinct costs. Transfer fees are paid to the conveyancing attorney for their services, while transfer duties are paid to the South African Revenue Service (SARS). In cases where a property is purchased from a developer, VAT may apply instead of transfer fees.
The appointment of bond cancellation attorneys for the seller and bond registration attorneys for the buyer is typically handled by the respective banks involved, with the seller covering the cancellation fees and the buyer covering the registration fees.
Here's a breakdown of these hidden costs to help sellers navigate the complexities
1.
Bond Cancellation: Sellers may need to cover bond cancellation costs if they have an existing mortgage. This expense includes penalty fees for insufficient notice to the bank and insurance premiums to maintain coverage during the sale process.
2.
Rates, Taxes, and Levies: Sellers are typically required to prepay three to six months' worth of rates and taxes. If the property is sold earlier than expected, excess payments may be refunded by the local council. In cases involving estates or sectional title properties, sellers may need to pay advance levies to homeowners' associations.
3.
Compliance Certificates: Sellers must obtain compliance certificates for electricity, gas, and other systems by hiring certified professionals to inspect and ensure functionality. These certificates include electrical, electric fence, water installation, plumbing, gas, and beetle-free certificates. Budgeting for potential repair costs, ranging from R400 to R1,000 per certificate, is advisable.
4.
Estate Agent's Commission: Sellers employing an estate agent typically pay a commission for their services in negotiations and marketing.
5.
Repairs and Maintenance: Sellers may be responsible for necessary repairs identified during a home inspection. While not legally obligated to fix defects, addressing patent defects (visible issues) is often advisable. Latent defects (hidden issues) may become the buyer's concern unless they can prove the seller concealed them.
6.
Moving Costs: Budgeting for the cost of hiring a moving company is essential to avoid stress associated with moving possessions yourself.
Understanding these hidden costs of selling a home in South Africa can help sellers prepare effectively for a smoother selling process and minimize unexpected financial surprises.