Reasons for delays with property transfers
MAIN IMAGE: Lethabo Mashishi, associate and conveyancer Adams & Adams
The lockdown put on hold many real estate transactions, but other factors also lead to a delay in property transfers.
Sellers, buyers, estate agents, banks and attorneys breathed a collective sigh of relief when it was announced that deeds offices could re-open on 4 May under Alert Level 4.
This meant – in theory – that property transactions previously concluded could be finalised, sellers could receive the proceeds of sale, purchasers who contracted to move into properties on registration could do so, estate agents could receive payment of their commission, banks could disburse loans granted and start receiving interest and attorneys could pass their fees.
Too happy, too soon
Unfortunately, says Lethabo Mashishi, associate and conveyancer at Adams & Adams, deeds offices only resumed operations on 13 May as they were waiting for PPE (personal protective equipment) and were arranging for staff to safely return to work.
Since re-opening, most deeds offices had to close their doors at some stage – some more than once – to decontaminate their buildings due to positive cases of COVID-19. “This, together with the fact that only a limited number of staff members are allowed in buildings, has caused delays in the examination of deeds. Luckily, it only takes deeds offices a few days to decontaminate their premises so that they can resume their operations,” Mashishi says.
(Except Cape Town, where it took a court order from the Cape High Court before the deeds office reopened after being closed for a week – read more in Court orders deeds office to step up. Ed)
Many fingers in the transfer pie
Transferring attorneys are dependent on external role players such as SARS and municipalities to have a property transaction registered – the Deeds Office requires a a transfer duty receipt issued by SARS and a rates clearance certificate issued by the relevant municipality.
All role players are expected to do their bit to successfully register a property transaction and the transferring attorneys are required to drive the conveyancing process, says Mashishi. Others involved are the attorneys attending to the registration of the purchaser’s bond, and the attorneys cancelling the seller’s existing bond. “All of these have their own requirements to comply with before a property transaction can be successfully registered,” he says.
The buck stops at municipalities
Currently, transferring attorneys are struggling to obtain rates clearance figures from municipalities. This causes delays and frustration, specifically for those who are financially dependent on the registration of transactions as they are now at the mercy of municipalities.
“Under normal circumstances, it takes a week to obtain rates clearance figures from a municipality and a further two to three days to obtain a rates clearance certificate once the figures have been paid. At the moment, some rates clearance figures that have been applied for during May 2020 are still outstanding.”
By law, a rates clearance certificate is only valid for a period of 60 days from the date of issue. Most transactions which were ready for lodgement in the Deeds Office prior to lockdown, now require new rates clearance figures as the certificates have expired.
It seems that rates clearance departments at the various municipalities did not work remotely during Alert Level 5 and are slow to get their operations back on track. “The backlog, coupled with the limited number of staff permitted at the office to process rates clearance applications, have dire consequences for the property sector,” Mashishi says.
And until such time as rates clearance figures and certificates are issued timeously, parties involved in property transactions will have no other choice but to endure the delay.
What homeowners can do
Mashishi says homeowners should ensure that their rates and taxs are paid up to date to ese the process. Should there be any arrears, and the municipality has commenced with a legal process to recover those arrears, it may cause a delay to the issuing of rates clearance figures by the municipality.
Homeowners should also send photographs of their meter readings to the transferring attorneys as this information will be required when applying for rates clearance figures, he says. “This will save municipal officials’ time as they will not have to go to a homeowner’s residence to obtain the latest actual meter readings.”
Mashishi says there are unfortunately no shortcuts as “there’s a process that must be followed when attending to transfer of a property and there’s no way to circumvent that process”.
The article was originally published in Sunday Times Neighbourhood on Friday 17 July 2020.