Buying a House
Buying a house?
A person (“buyer”) must contact his/her bank to find out whether or not s/he qualifies for a home loan and if so, what amount s/he qualifies for.
A buyer must make sure that s/he can afford the monthly loan repayments and costs like, rates and taxes, water and electricity, insurance premiums and so on .
A buyer must ask about any once off costs, for example, legal costs, transfer duty/VAT, loan administration, initiation and registration fees and so on.
A buyer must also consider his/her future needs, for example, is the house close to his/her work, shops, schools, hospitals and so on .
A buyer must examine the house s/he intends to buy thoroughly for any defects or potential defects, for example, cracks in the walls, damaged roof, plumbing and so on . The defects should be taken into consideration when negotiating a purchase price of the house.
A buyer must request the seller to provide the following documents, relating to the house s/he intends to buy: copies of the title deed and diagram; any lease agreements; approved building plans; and any other relevant information (such as zoning, town planning or municipality requirements). These documents must also be taken into consideration when negotiating a purchase price of the house.
After examining the house and perusing the relevant documentation the buyer must decide whether or not s/he is interested in buying the house. If the buyer is interested in purchasing the seller’s house, s/he must make an offer to the seller or his/her estate agent.
When the terms and conditions of an offer to purchase are being negotiated , the buyer will be asked for the date that s/he intends to move into the house (occupation date).
If no date is set, the person selling his/her house (“seller”) has the right to remain in the house until the house has been registered into the buyer’s name (“transferred”) and the seller has received the purchase price.
After the buyer and seller have reached an agreement on the terms and conditions of the sale, the offer to purchase must be reduced to writing (if not already done so) and signed by both the buyer and the seller in acceptance; a sale agreement comes into existence.
Any amendment (change) to the sale agreement must be done in writing signed by both the buyer and the seller.
Selling a house?
A seller can sell his/her house privately or through an estate agent.
A seller may appoint one or more registered e state a gents to list his/her house to be sold.
An estate agent must be registered by the Estate Agency Affairs Board (“Board”) and hold a fidelity fund certificate.
The estate agent and the seller will enter into an agreement called a mandate in terms of which the estate agent will be entitled to receive commission for selling the seller’s house. The estate agent must explain the terms and conditions of the mandate to the seller.
When the seller’s house is on show, the house should be kept neat and clean so that it is attractive to potential buyers on the day of the show.
Estate agencies have their own standard sale agreements that can be used for the purpose of buying/ selling a house.
If a seller decides to sell his/her house privately, s/he is advised to rather approach an attorney to draw up a sale agreement than using a sale agreement downloaded from the internet.
A seller should inform the buyer of all defects or potential defects relating to the house, even if s/he is selling the house voetstoots.
Upon receipt of the buyer’s written offer to purchase (“offer”) the seller’s house, the seller should read through the offer carefully, c ross- out any thing that s/he does not agree with , cross-out any open spaces, and add anything that should be included. The seller should initial next to the places on the offer where s/he has crossed-out or added something and provide the offer back to the buyer for his/her consideration.
If there was nothing to be crossed-out or added, the seller may accept or reject the buyer’s offer.
What must a seller do if s/he feels that his/her estate agent has acted unprofessionally?
Complaints against estate agents may be lodged at the Estate Agency Affairs Board. For example, the estate agent listing the seller’s house at a different price than agreed upon.
The Estate Agency Affairs Board will conduct an investigation and may conduct a hearing. If found guilty the estate agent may be fined, reprimanded, or his/her fidelity fund certificate may be withdrawn. An estate agent without a fidelity fund certificate is not entitled to payment of commission. The contact details of the Estate Agency Affairs Board are:
Telephone number: 087 285 3222
Website address: www.eaab.org.za
What terms and conditions should appear in the sale agreement?
The terms and conditions that the seller and the buyer MUST agree on are:
Identity of the seller and the buyer: by including their names, identity numbers, addresses and/or marital statuses.
Description of the house being sold by the seller: by including the deeds office’s description, size, and/or street address of the house being sold.
Purchase price of the house payable by the buyer: by including how the house is going to be paid by the buyer, for example, in cash or by obtaining a loan, and whether or not a deposit is payable. If a deposit is payable, the deposit must be held in an interest bearing trust account by the conveyancer (the attorney instructed to transfer the house). If the purchase price is R250 000 or less, a cooling-off period of 5 working days will apply.
The terms and conditions that the seller and the buyer MAY also agree on are, for example:
Fixtures and fittings: anything else included in the sale of the house must be specified, for example, a tool-shed, curtains, remotes and so on.
Conveyancer: details of the conveyancer handling the transfer. Usually the seller decides on a conveyancer, however, the seller and the buyer may also agree on a conveyancer.
Costs: person responsible for certain costs relating to the transfer of the house, for example, obtaining a clearance certificate, transfer duty/VAT and so on. The buyer and the seller are usually responsible for their own costs relating to the obtaining of or cancelling of a loan for the house.
Occupation: t he date of occupation by the buyer (on registration or a specified date before or after registration of the house into the buyer’s name) and the amount of occupational rent payable by the seller or the buyer, if any.
Voetstoots: when a house is sold “as is” (current condition). The defects or possible defects must be disclosed to the buyer to avoid liability for damages.
name of the e state a gent and the amount of commission payable, if any . The commission is negotiable between the seller and the estate agent.
Certificates: the seller to provide, at his/her costs, an electrical compliance certificate , electrical fence certificate, pest control certificate and/or a g as compliance certificate.
Suspensive conditions : for example, whether the sale is subject to the buyer obtaining a loan within an agreed period of time. The sale cannot proceed until all the suspensive conditions have been met.
Breach: what will happen if the seller or the buyer does not comply with the sale agreement, for example, if the buyer breaches the agreement of sale, the seller will notify the buyer to fix the breach within 7 days, should the seller not fix the breach the seller will be entitled to proceed with a claim for performance in court or cancel the sale agreement and proceed with a claim for damages in court.