The compliance changes affecting property buyers and sellers

In the past 12 to 18 months, the most significant changes affecting property transactions have not necessarily been sweeping new laws, but rather adjustments to tax thresholds, stricter compliance requirements and administrative processes that affect how transactions are completed.

“One of the most important shifts in the market is the growing emphasis on compliance and documentation,” says Antonie Goosen, principal and founder of Meridian Realty. “Property transactions today require much more structured administration than they did in the past.”

One area that buyers should pay particular attention to is transfer duty thresholds and tax implications. Transfer duty is typically payable by the buyer when a property changes ownership, and revised thresholds in recent years have changed the cost calculations associated with property purchases, particularly in higher price brackets.

“Many buyers focus only on their bond repayments,” Goosen explains. “But affordability must also include transfer duties, legal fees and other upfront costs associated with registration.”

Another area affecting transactions is stricter administrative processes around transfer documentation. Increasingly detailed verification requirements mean that inconsistencies in identity documents, company structures, or property details can slow down the transfer process. “The best way to avoid delays is ensuring that documentation is accurate from the beginning of the transaction,” says Goosen.

Compliance requirements within the property profession itself have also become more prominent. Estate agents must maintain valid Fidelity Fund Certificates and ensure their agencies comply with regulatory standards. Financial Intelligence Centre compliance is another area affecting property transactions. Buyers and sellers may be asked to provide more detailed identity verification and proof of funds documentation, particularly where complex ownership structures or international buyers are involved.

Sectional title governance has also become a greater focus for buyers. Purchasers increasingly examine levy levels, financial reserves, maintenance plans and scheme governance before committing to purchases.

Finally, municipal compliance is becoming more transactional. “There is far greater scrutiny today around approved building plans, compliance certificates and municipal documentation,” says Goosen. “Identifying these issues early in the transaction process can prevent serious delays later.”

Ultimately, Goosen says regulatory complexity is now simply part of the property environment. “Agents who organise compliance clearly and guide clients through the process calmly tend to build the most trust,” he says.

When selling your property, it is necessary for the conveyancer to obtain a rates clearance certificate (RCC) from the relevant local authority, or municipality, before transfer can be registered in the Deeds Office.

According to conveyancers and property Law attorneys at Abrahams & Gross, the RCC issued by the city council certifies that there are no outstanding funds due to the municipality at the time of the registration of transfer to the purchaser. This certificate is required under the Municipal Systems Act and must be lodged in the Deeds Office for registration. The Registrar of Deeds will not register the transfer of a property unless the conveyancer lodges a valid RCC along with other required documents at the Deeds Office.

Rates Clearance Figures

The conveyancer will make application to the city council for the issuing of rates clearance figures. Rates clearance figures are comprised of all arrears amounts for rates, taxes, electricity, water, sewerage, and refuse, as well as an advance payment covering a period of 60 days being the period of validity of the rates clearance certificate (municipality may require up to 120 days).

Whose responsibility is it to obtain a rates clearance certificate?

It is the seller’s responsibility to settle amounts due in order to obtain the RCC. Upon request, the seller must pay the conveyancer and not the city council directly. The conveyancer will then pay the city council to ensure that the payment is linked to the application number in respect of the transfer as well as for the purposes of expedition of the issuing of the rates clearance certificate.

Once the conveyancer has paid for and obtained the RCC, the seller’s account at the city council will be in credit and the seller will no longer be required make any further monthly payments to the city council prior to transfer.

Once registration of transfer has been completed, the conveyancer submits a refund form to the city council in respect of any credit that maybe be due to the seller. This usually occurs when the registration of transfer takes place prior to the expiration of the 60-day period. The city council can take approximately four to seven months to reconcile the seller’s and purchaser’s accounts and pay the refund.

This article is based on information provided by the Conveyancing and Property Law team at Abrahams & Gross. While care has been taken to ensure accuracy, the content is provided for general information purposes only and should not be regarded as legal advice. Always consult a qualified attorney for guidance on your specific circumstances.

Original Article: https://www.property24.com/articles/the-compliance-changes-affecting-property-buyers-and-sellers/32975