The real estate industry in South Africa allows a rookie agent the chance to work and study at the same time.
In terms of the regulations governing the industry, an estate agent will have completed a 12-month internship under the supervision of a fully-qualified agent.
A property practitioner needs to complete training and obtain formal qualifications (Further Education & Training (FET), National Qualification Forum (NQF) Level 4 Real Estate and a Professional Designation Exam Level 4 that.
An agent will normally do these at the same time as their internship.
Make sure you have an agent who puts your requirements first!
Questions aboutBuilding Work, Building Plans and Building Lines
Hardly a day goes by without questions from disgruntled homeowners relating to issues with discrepancies in house plans and building work. When I’m inspecting, I often find discrepancies between the approved plans and the built structure.
If you are selling your house, and don’t have municipal-approved plans or necessary permissions, you could be in trouble. If you are buying a house, and don’t ask for approved plans or permissions, you might have very expensive problems.
Homeowners can also be in trouble with the municipality for the erection of illegal structures. Some municipalities have aerial photographs of suburbs taken every four years to check if alterations have been made to homes. In addition to this, municipalities assign building inspectors to monitor developments on the ground.
Legal Implications of Selling a House Without Approved Plans
The law requires all major building work to have plans drawn up and approved by the local authority. Therefore, it stands to reason that every house should have plans. But this is not always the case! A lack of approved building plans is a major problem for many people buying and selling houses and other buildings.
Sometimes people only discover that there are no plans years after they have bought a property. This comes to light either because they eventually want to do alterations, or because they want to sell. Buyers often find that a house they are buying does not have plans. They then want to know whose responsibility it is to have plans drawn up retrospectively (“as-built”).
It can become a complex legal matter if alterations and additions have been carried out without local authority approval.
Are Building Plans and Building Approval Always Required for Houses?
The National Building Regulations and Building Standards Act specify the need for building plans and approval. Therefore, it is the local authority that governs what can be done in terms of its zoning regulations and National Building Regulations. So it is they who give approval (or deny it) for all building work and renovations on all properties. However, most municipalities are more lenient when it comes to minor building work.
The Act states that the municipality may grant relaxation where the approval of plans requires the necessity of relaxation. However, you will have to apply for relaxation in writing and receive approval in writing.
If your property is within an estate townhouse or cluster complex, you will also need to get a copy of the Estate Guidelines from the Aesthetics Committee, Body Corporate, Residents Associations etc. Moreover, there may be a list of requirements that ensure aesthetic harmony and good building practices within the estate or complex. Furthermore, you will need your plans stamped and a letter from the Body Corporate for Council indicating that they are happy with your planned building.
How the Issue of “Voetstoots” Affects Building Approval and Plans
The purchase agreement made between buyers and sellers of the property will include a voetstoots clause. Essentially this clause indicates that the purchaser accepts the risk relating to defects existing at the time of the sale, patent or latent (but not visible). However, the exceptions to this clause are instances where the seller deliberately and fraudulently conceals latent defects from the purchaser, that they were aware of at the time. In this instance, the seller will remain liable for these defects. But of course, the purchaser will have to provide evidence that the seller knew what was wrong.
A buyer may cancel a transaction after a home inspection! Sellers and agents may be tempted to blame an overzealous home inspector when a transaction falls apart after the inspection of some houses.
But there’s more to that situation than meets the eye.
Estate professionals know there are many ways that deals can fall apart, from credit, financing, appraisals to plain cold feet. But certainly, one of the more common deal killers is the home inspection.
But it doesn’t have to be!
Houses and Home Inspectors Do Not Kill Deals
Four home inspection situations lead to a cancelled transaction. Two things which are not on this list are the house and the home inspector. Some estate agents blame the home or the home inspector. However, let’s consider what happens in these situations.
Problems are caused when the home inspection report significantly alters the buyer’s expectations about what they thought they were buying. The client may say, “Gee, I thought I was buying a well-maintained home, but now that we have looked closely, I see the house requires a lot more maintenance than we expected”.
Therefore, the cancellation has everything to do with the client’s expectations coming into the inspection! Agents may wish that the home inspector had been less forthcoming about the condition of the house but this is not the solution! The solution to this problem is buyers having more realistic expectations before they sign the contract. My website and blog attempt to teach people skills that will help them look at houses and evaluate risk so they are more prepared to make an offer on the right house.
Here are the top four reasons buyers cancel a deal after the inspection.
1) Unprepared buyers
There are no classes in university or high school to teach people how houses work or where the risk lies in a residential building. Even professional estate agents have little or no training to help them understand how to look at houses and identify issues. A new generation of homebuyers, many of whom who did not grow up working on their houses with their parents, compounds this problem.
Critical Home Seller Mistakes and How to Avoid Them
By Kay Pascale.
Selling your home is one of the most important life-changing decisions you’ll make. Moreover, it’s both personal and financial, and the stress of the home sale process can leave you open to some critical, and costly, mistakes. Here are a few common mistakes and how to avoid them.
Choosing the Wrong Real Estate Agents
The second most ill-advised choice, beyond trying to sell your own house, is the wrong choice of estate agents. As a result, properly-vetted estate agents, with proven sales records, can help you with many of the costly legal requirements of property transfer as well as avoiding the myriad of pitfalls of a poorly marketed home. Therefore, consult several local estate agents and ask each how they would market your home. Also, ask for a comparative marketing analysis that would give you the values of homes in your area.
Part of a successful home sale is the attractive staging of the property. In addition, decluttering your home will allow the potential buyer to visualize themselves in the home. Putting your extra clutter from the garage, attic, and even some of the main rooms of your home in storage will make your home feel more spacious to the buyer.
In addition, small upgrades like fresh paint and home repairs are necessary to secure the best price for your home. The basics of home maintenance give the buyer confidence in your home as their choice. Also, keeping your home picture-perfect and ready at a moment’s notice for a showing can greatly improve the likelihood of a successful and quick sale. A well-staged home ready for viewing will get the most potential buyers for your home.
Your House Too High
Pricing your home too high is one of the costliest and time-delaying mistakes. Too high a price can turn off buyers and delay the sale of your home. As a result, each subsequent lowering of your sale price will put you in a more vulnerable position in negotiating an optimum home sale price.
Giving a 90-Day Notice
One of the legal pitfalls that good estate agents can help you avoid is not giving a 90-day notice of cancellation to the bank. This is a costly mistake since it results in a penalty of 1% on the remaining balance on the bond for the full 90 days.
When Estate Agents Should Insist On An Independent Inspection
The EAAB (Estate Agents Affairs Board) encourages buyers to have a home inspection. However, which buyer ever reads the articles on the EAAB’s website? Maybe estate agents read the articles and the EAAB encourages estate agents to advise buyers to have an independent property inspection?
Most estate agents prefer not to have an independent property inspection, mostly because of concerns over defects that may make the sale fall through and because of the cost involved.
Estate agents should know better! Insisting on an independent property inspection may save the agent from strained relationships with both sellers and buyers. Furthermore, an independent inspection will prevent damage to their reputation or possibly even costly liability later on, should problems occur with the condition of the property.
An independent home or property inspection doesn’t kill a deal by forcing sellers to disclose defects that they wouldn’t otherwise have known about. Any defect that is serious enough to kill a real estate transaction is best discovered before it can kill the deal or result in litigation at a later stage.
Check that the agents and agencies are registered with the EAAB (Estate Agency Affairs Board).
Agents can assist in realistically pricing the property by providing information based on comparative market analysis.
Agents should also have a support structure, and the means, to market and advertise your property.
Estate agents should be able to offer you professionalism, good timekeeping, be presentable, be prepared and competent.
They should offer you the best service, which entails an accurate property evaluation, marketing plan and excellent communication. Furthermore, they should keep you informed during every step of the process. Also, agents should also be honest with you and give you their professional opinion.
Ask the following questions:
Do you have a marketing plan for my property?
What is the time period that you think you can sell our house in?
Have you sold homes on our street?
What prices did you get for these homes?
Who do you think is going to buy our home?
What is your commission percentage/amount?
How long a mandate do you suggest?
Your buyer receives ownership with the registration of the property into the buyer’s name from the Deeds Registry Office.
Conveyancing is the legal process that takes place when lawful ownership is obtained of immovable property. A new deed of transfer is drawn up and registered each time a property is sold. As a result, this ensures the security and certainty of an owner’s title to the property.
Three attorneys are involved in buying/selling the property:
Conveyancers (Transferring Attorneys)
They transfer the property from you to the buyer.
You appoint them and they represent you.
Registering (or Bond) Attorneys
They register the bond of the property for the bank financing the purchase of the property.
They represent the buyer and the bank granting the buyer’s home loan.
Appointed by the lending bank.
They cancel the seller’s existing home loan on the property.
They represent the bank cancelling the seller’s home loan.
Appointed by the bank cancelling the seller’s bond.
What can you expect from your Conveyancer?
The Conveyancer should:
protect your interest at all times and these interests should outweigh all other considerations;
inform you of the conveyance procedure and keep the seller informed of the progress of the transaction;
advise you on the content of the Offer to Purchase, especially regarding suspensive conditions;
advise you on the cancellation of the bond, any penalties, notice periods and other administrative charges;
obtain your instruction before issuing any guarantees in respect of the transaction;
do everything in his power to register the transaction as close to the date in the offer to purchase;
ensure no delay of the transfer advising you on your obligations in the offer to purchase;
meet with you to explain, as well as sign the necessary documentation in order to conclude the transaction;
take care of the preparation of the deeds for lodgement;
inform you of the transfer on the day of registration;
account to you for finances relating to the transaction within two days after registration.
Your current bond on the property
Many home sellers fail to give the banks the obligatory 90-day notice, resulting in penalties.
The usual penalty charge is 1% of the outstanding amount of the bond, for the full 90 day period.
Giving notice of an intention to sell does not mean the sale has to take place within a specified period.
The bank’s attorneys will freeze your bond account, and all money in it when instructed to cancel the bond. This can become problematic if you need cash, e.g. for the deposit on your next home. Draw sufficient funds prior to your attorney requesting the bond cancellation.
Be aware that your cancelled bond will pay out after, on average, ten weeks.
Pay all rates up to date
In order to obtain a Rates Clearance, you will need to pay all outstanding rates and services. In addition, you will also pay an additional advance (up to four months) on rates and services.
Without a valid rates clearance certificate your property cannot be transferred.
Financials of sectional title property schemes
A copy of the financial statements is required if the property is part of a sectional title complex. Furthermore, ensure that you have a copy of the management and conduct rules of the body corporate.
The buyer’s bank requires these documents before the loan is granted. The buyer may also want these documents before making an offer. There have been cases where sales fell through if the financial statements of the body corporate were not up to date.
Therefore, do your homework before you sell!
Resolve HOA or body corporate property disputes
If your property is a sectional title unit, it is important to sort out any issues with the body corporate, e.g. levies or certain living and design guidelines, before you sign an Offer to Purchase.
The homeowners association (HOA), or body corporate, will provide you with a clearance certificate to transfer the property. In addition, you will have to pay 3 months of levies in advance.
Often a title deed requirement is that such an association must consent to the sale. However, the association may withhold consent if there is a dispute.
Therefore, before you sell, resolve disputes with the association.
FICA requires that the attorney verifies the identity and obtains the requisite documentation in respect of every seller. Furthermore, this is applicable to every purchaser of property on whose behalf funds are invested.
You need to provide the following:
Copies of ID’s
SARS income tax numbers
Proof of residence.
Additional documentation required for transfer
You need to provide the following documents for your property:
Approved building plans that are up to date including all alterations including occupation certificates.
The latest municipal accounts with respect to rates and taxes, electricity, water and other consumption charges.
The latest levy and/or Homeowners Association accounts.
The duration of the registration of the sale depends on the complexity and individual requirements of the sale. However, a rule of thumb is that it will take approximately three months.
Occupation of the property prior to registration
Do not allow a buyer to start renovations or makes changes to the property before the transfer is complete! However, you may give the occupation of a property once all the suspensive conditions have been met.
Where applicable, the Conveyancer may hold the balance between the bond and the purchase price in trust.
You can protect yourself from the buyer making any changes to the property before the transfer has taken place. Therefore, you will need to include a clause in the Offer to Purchase prohibiting this. This is often a standard clause.
If the buyer starts making changes, without any form of security, you must immediately inform the Conveyancer and the agent. Thereafter, the buyer either has to halt making changes or provide collateral funds. You can then return the house can to its original state if the sale fails.
Finally, your agent will be able to advise you on procedures regarding occupation, handing over of keys, etc.