Buying or selling a home is one of the biggest financial transactions most people make, but they have little say in the process. Once the offer to purchase is signed, and all financial requirements are met, buyers and sellers step back as the legal and financial professionals conclude each step.
Once the offer to purchase is signed, and all financial requirements are met, buyers and sellers step back as the legal and financial professionals conclude each step.Despite all checks and balances, there are vulnerabilities in the process, including delays in transfer, errors, and even fraudulent transactions, which can result in financial losses for the buyer and seller.
Property transfer process
To understand the risk, buyers and sellers should understand the complexity of the property transfer process.
According to CEO of the Payment Exchange of South Africa (PEXSA), Willie Stoman, there are a number of steps in the property payment system where PEXSA verifies the relevant account before making payment (AVS).
1. The Buyer presents offer to purchase and Seller accepts and signs the offer. In terms of the agreement, the purchaser either must obtain a home loan or will pay cash for the property. A deposit is required to confirm the offer to purchase.
2. The seller has the choice to appoint the conveyancer or transfer attorney.
3. Usually, three attorneys work on the transaction, namely a transfer attorney managing the change of ownership, the bond cancellation attorney cancelling the sellers existing bond, and a bond attorney registering the new bond for the purchaser.
4. The transfer attorney must obtain FICA documents from both parties and apply for the seller’s bond cancellation figures. They then send the original title deeds to the bond cancellation attorneys.
5. Once the transfer attorney has the transfer documents prepared, the purchaser and seller sign the documents.
6. Then the transfer attorney requests figures and a clearance certificate from the municipality to ensure the seller’s rates and taxes payments are up to date. The attorney submits the clearance certificate.*
7. The purchaser must pay SARS transfer duty – this is done through the transfer attorney, who requests a transfer duty receipt from SARS on e-filing.*
8. Once the transfer attorney has all of the required documents, they are lodged in the deeds office, with the new bond registration and old bond cancellation.
9. From the date of lodgement, it takes 8-10 working days for the documents to be processed.
10. If there are no changes required by the deeds office, the transaction is registered. The purchaser is now the rightful owner of the property.*
11. The new title deed is delivered a few months after registration and given to the bank that has registered the home loan.
*Points in the property payment system where PEXSA verifies the relevant account before making payment (AVS).
This complex system involves a number of players, and until recently it was difficult to track payments through the process and have full accountability throughout.
“PEXSA’s payment system changes this, providing a secure e-conveyancing payments and settlements platform,” said Stoman.
“Not only does the system streamline payments significantly, but it also provides an enhanced audit trail that makes it easy to track each roleplayer’s actions through the process,” he adds.
There is a separation of duties (the system requires data capture, account verification and payments to be actioned by different individuals within the conveyancer’s practice). These checks and balances are key to the system’s security.
A system such as PEXSA enables conveyancers to control the payment process from a single point of entry instead of logging onto a multitude of banking platforms to facilitate all the payments. It also enables same day payment when the property registers, so there are no delays in the various parties receiving the funds due to them.
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