When purchasing a property, most Purchasers are aware of the financial obligations that come with the transaction— payment of transfer duty, transfer and bond registration costs, Deeds Office fees, to name a few. However, what is often overlooked is that the process of registering a transfer of ownership carries costs not only for the Purchaser, but also for the Seller and are equally important in finalising the transfer.
Understanding the full financial picture is essential for both parties to navigate the transaction with clarity and to prevent anyone from being caught off guard by unexpected costs along the way. The following are some of the typical costs to be aware of that are borne by the Seller:
1. Rates Clearance Figures
A transfer of property may not be registered in the Deeds Office without a clearance certificate issued by the municipality in which the property is situated certifying that all municipal service fees, property rates and other municipal taxes and duties during the two years preceding the date of the application for the certificate have been fully paid.
Rates clearance figures are requested from the municipality by the transferring attorneys and usually issued for a period of two to three months in advance to allow sufficient time for registration. The Seller shall be responsible for payment of the rates clearance figures as issued by the municipality, which amount shall be paid before lodgement of the transaction in the Deeds Office in order to obtain a clearance certificate. The Seller shall receive a pro-rata refund from the municipality for the period included in payment after the date of registration of transfer into the name of the Purchaser.
2. Levy and Home Owners’ Association Clearance Figures
If the property is part of a sectional title scheme and/or the title deed contains a condition that the property may not be sold without a clearance certificate confirming that all amounts due to the Body Corporate or Home Owners’ Association have been paid up to date of registration, the transferring attorney will also be required to request clearance figures from the said Body Corporate or Home Owners’ Association.
This amount will include all outstanding levies preceding the date of the application in respect of the property, but will also include levies for a period of one to three months in advance to allow sufficient time for registration. As is the case with municipal rates clearance figures, the Seller shall also be responsible for payment of the issued levy clearance figures in order to receive the Levy Clearance Certificate and/or Home Owners’ Association Consent for lodgement in the Deeds Office. The Seller will, upon registration, receive a pro-rata refund from the transferring attorneys for levy clearance figures paid after registration of transfer.
3. Certificates of Compliance
Depending on the terms of the Agreement of Sale, the Seller shall further be legally obligated to, at his own cost, furnish the Purchaser with various compliance certificates confirming that certain features in respect of the property conform with requirements prescribed in terms of municipal by-laws and legislative regulations. These may include the following:
- Electrical Compliance Certificate
- Plumbing Certificate (a requirement in terms of the City of Cape Town Water By-law)
- Beetle Certificate (common in coastal regions)
- Gas Certificate (if gas installations exist)
- Electric Fence Certificate (if applicable)
The costs for the Seller include inspection fees in respect of the property, as well as a fee for issuing of the compliance certificates. Should any corrective work be required as a precondition for the certificates to be issued, the Seller shall further be responsible for the costs of ensuring that the necessary repair work is carried out.
4. Estate Agent’s Commission
If the sale of a property was facilitated by an estate agent, their commission shall be payable by the Seller upon successful registration of transfer. This commission is typically agreed upon in the Agreement of Sale and usually ranges between 4% and 7% (plus VAT) of the purchase price, making it one of the most significant expenses borne by the Seller.
5. Bond Cancellation Costs and Penalties
If the property has an existing bond, it must formally be cancelled in the Deeds Office simultaneously with registration of transfer. The cancellation process is handled by panel attorneys appointed by the bank. The fee charged by the cancellation attorney for this service typically ranges between R4,000.00 and R6,000.00. This fee is payable by the Seller and is usually deducted from the proceeds of the sale by the transferring attorneys and paid over to the cancellation attorneys on registration.
Furthermore, if the Seller does not give their bank at least 90 days’ written notice of their intention to settle and cancel the bond, the bank may impose a penalty which can amount to up to three months’ worth of interest on the outstanding bond amount. Once the Seller informs the bank of the intention to cancel the bond, the penalty period will start running and will last for 90 days from the day that notice is received. During this time, the penalty amount gradually decreases until the 90-day period ends. It is therefore pivotal to be proactive about bond cancellation by notifying the bank early and understanding the applicable fees to help minimise unnecessary costs.
6. VA Costs
If the original title deed to the property has been lost or destroyed, the Seller shall be responsible for covering the costs associated with applying for and registering a VA Copy — a certified copy of the original title deed issued by the Deeds Office to replace the lost original.
The process involves drafting and lodging a written application for the issuing of a VA copy, advertisement in a local newspaper confirming the intention to register a VA copy, and payment of Deeds Office and Conveyancer’s fees for attending to the application, which typically range from R2,000.00 to R4,000.00.
Whilst Purchaser-related costs tend to receive more focus in property transactions, it is equally important to note that the Seller also has a number of financial obligations that should not be overlooked. Being aware of these costs upfront can help avoid delays, prevent unexpected surprises, and ensure a smooth transfer process for all parties involved.
Written by: Conraad van Lill
Attorney, Notary & Conveyancer
DKVG Cape Town Office