The conveyancing procedure is an essential element in the sale of any property, and the seller of any property has to engage the services of a conveyancer. Yet very few people are aware of what conveyancing entails and what a conveyancer is and does.
What is a conveyancer?
Let us explain.
Firstly, while every conveyancer is a qualified attorney, you must understand that every attorney is not a conveyancer. A conveyencer is an attorney who has obtained additional qualifications in order to be able to practise in this branch of of the law.
This qualification requires that a candidate (who must be a qualified attorney) studies for and writes an examination which is set by the Law Society. On passing, application for admission must be made to the High Court. The candidate must submit notice of motion with all supporting affidavits and documents. He or she then appears in court, and if all the documentation is order and the judge is satisfied, the candidate will be admitted as a conveyencer. His or her name will subsequently be listed at the Deeds Office as a registered and listed Conveyencer.
Often a qualified conveyencer specialises in conveyencing only, and does not handle other legal matters, although some conveyencers do both.
The conveyencing procedure
The conveyencing procedure is important for intending property buyers and sellers, in that it reflects the main element in which both parties are interested – the progress of the transfer of ownership of the property sold.
The first phase in the sale of a property is the agreement of sale into which one enters, establishing rights and obligations for both parties. Once both parties have signed, they have effectively purchased and sold the property, and each party then has the right to enforce performance of the other party’s obligations in terms of that agreement.
So, on signature of the agreement of sale it becomes the purchaser’s right to procure transfer of the property into his or her name. Similarly it becomes the right of the seller to receive payment of the purchase price once the property has been transferred into the purchaser’s name.
The purpose of the conveyancing procedure is to give effect to this agreement of sale, and to implement the transfer of the property from the seller into the purchaser’s name. Ownership of the property passes from seller to purchaser, not when the agreement of sale is signed, but when the transfer is registered
Put it this way: when the purchaser buys a property he or she has the right to have the property transferred and registered in his or her name, but that right must be implemented by the official registration of transfer of the property into the purchaser’s name through the conveyencing procedure. The right to ownership comes into effect only upon the property being transferred into the purchaser’s name at the Deeds Office.
Similarly, payment of the purchase price to the seller is effective only upon registration of transfer. Only then is the seller entitled to payment of the full purchase price. Prior to registration of transfer, payment of the purchase price is made to the relevant estate agent or conveyencer, who will then hold the funds in his or her trust account, or there must be a suitable bank guarantee.
The purchaser may take occupation before the registration of transfer date, but not as the owner. He occupies effectively as a tenant paying occupational rental until registration.
So it is important, as we mentioned earlier, for both parties to understand the conveyencing procedure in order to ensure that their particular interests are protected. The seller wants payment of his purchase price to be effected, and purchaser wants to become the owner of the property.
The crux of the matter, therefore, is speed, and the conveyencer’s performance is measured by one single aspect – how quickly he can transfer the property.
What the conveyancer does
When there is a mortgage bond registered over a property, and the purchaser has procured a loan secured by a mortgage bond to pay the whole or part of the purchase price, three basic types of transactions are applicable:
- The cancellation of the seller’s existing mortgage Simultaneously, the transfer of the property into the new owner’s name And also simultaneously, the registration of the purchaser’s bond
- There is a fourth possibility – that the property transactions may be financially linked in the sense that, for example, the purchaser has sold another property, and the proceeds of that sale, or part thereof, are being used to pay the purchase price of the property he is now buying.
All the above transactions require conveyancers, and sellers have no choice. They cannot handle these transactions on their own, and by law they must engage the services of a conveyencer.
The conveyencer performs certain basic functions:
- The drafting of the formal documentation which has to be lodged at the Deeds Office. Most important is the deed of transfer, but various supporting documents have to be provided as well: these include a power of attorney authorising the conveyencer to appear before the Registrar of Deeds to transfer the property on behalf of the seller; the rates clerance certificate obtained from the relevant local authority; and the transfer duty receipt issued by SARS.
- Handling of the finanancial arrangements. The conveyencer must arrange to provide a guarantee to the bank which granted the existing mortgage bond, in order to obtain that bank’s consent to the cancellation of that bond. This means that he or she must obtain a guarantee from the bank registering the new bond for the purchaser, to provide the funds to clear the existing bond. He will also obtain aguarantee from the bank for payment of the balance of the bond to himself as the purchaser’s conveyencer. These guarantees become payable on registration of the transfer.
- Taking responsibility for the accuracy of certain facts by conducting the necessary investigations and obtaining the necessary evidence confirming, for example, the marital status of the parties; that none of the parties is insolvent; and in the case of legal entities such as companies, closed corporations, trusts, voluntary associations (such as clubs and churches), that the legal entity concerned has the power to sell and / or purchase property, and the necessary resolutions to do so have been procured.
- The scrutinization of the existing title deed of the property in order to determine restrictions imposed thereby, such as registered servitudes and other title deed conditions, expropriation endorsement, and obtaining the official Deeds Office records to verify the property description, to determine whether a mortgage bond/s has been registered and is/are consequently to be cancelled, and / or whether the property has been attached in terms of a warrant of execution, in which event the attachment must be uplifted in order to transfer the property.
This is what happens step by step:
- The purchaser obtains a bond from the bank of his choice, and the bank instructs its conveyencer to register the bond.
- The seller appoints a transferring conveyencer to transfer the property into the name of the purchaser.
- The seller’s conveyencer then approaches the conveyencer of the purchaser’s bank for two guarantees – one in favour of the existing bondholder for the outstanding balance on the existing bond (to be paid on to the bank holding the bond); and the other in favour of the seller’s conveyencer for the balance of the amount owing on the purchase price.
Once the transfer has taken place, the conveyencer must then account to the parties. He must draft two detailed statements reflecting all the relevant transactions – one for the seller and the other for the purchaser – and must pay over to the seller the amount which is due. This is the balance of the purchase price, less the various expenses involved in the transaction.
Bear in mind, the above outline of the functions of a conveyancer gives the broad picture of the basic transactions he or she handles on behalf of the client. Drafting the formal documentation, handling the financial arrangements and satisfying him or herself as to the accuracy of relevant facts in terms of his or her responsibility as described, sounds so simple, but this is far from true.
Each step in the sale of a property involves a host of details and requires the specialist knowledge of a conveyancer. If you are entertaining the thought that you don’t need the services of a conveyancer, and that the law should allow you to do your own thing, forget it. Accept the fact that if you are selling a property your conveyancer’s specialist knowledge is completing a complicated procedure on your behalf, and protecting your rights throughout the process.
Disclaimer: This article is for information purpose only and does not constitute legal advice. Call on our attorneys for legal advice, rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing.