When buying or selling immovable property, understanding the associated costs and who is responsible for them is crucial. Both buyers and sellers need to be aware of these expenses to budget appropriately and avoid any unexpected financial surprises. Here’s a breakdown of the typical costs involved in a property transaction and who is responsible for each.
Costs Typically Borne by the Seller
- Agent’s Commission:
- The seller is usually responsible for paying the real estate agent’s commission. This fee is negotiated at the outset and is typically a percentage of the final sale price.
- Compliance Certificates:
- Depending on local laws, the seller may need to provide various compliance certificates, such as electrical, plumbing, gas, and beetle certificates. These costs cover the inspection and certification that the property meets required standards.
- Bond Cancellation Fees:
- If the seller has an existing mortgage (bond) on the property, there will be costs associated with cancelling this bond. The bank usually charges a fee to process the cancellation.
- Rates and Taxes Clearance Certificate:
- The seller must obtain a clearance certificate from the local municipality, proving that all rates and taxes on the property are up to date. The seller must pay any outstanding amounts before the certificate is issued.
- Levies Clearance Certificate:
- If the property is part of a sectional title scheme or homeowners’ association, the seller must obtain a levies clearance certificate, confirming that all levies are paid up to date.
- Advertising Costs:
- In some cases, the seller may bear the costs of advertising the property if this is agreed upon with the estate agent.
Costs Typically Borne by the Buyer
- Transfer Duty:
- Transfer duty is a tax levied on the transfer of property and is usually paid by the buyer. The amount varies based on the property’s purchase price and is calculated according to a sliding scale.
- Conveyancing Fees:
- The buyer is responsible for paying the conveyancing attorney, who handles the transfer of ownership. These fees are based on a tariff recommended by the local law society and are usually calculated on a sliding scale relative to the property value.
- Bond Registration Fees:
- If the buyer requires a mortgage to finance the purchase, there will be bond registration fees payable to the conveyancing attorney handling the registration of the bond.
- Deeds Office Fees:
- These fees are charged by the Deeds Office for the registration of the transfer and the mortgage bond. The buyer usually covers these costs.
- Occupational Rent:
- If the buyer takes occupation of the property before the transfer is registered, they may be required to pay occupational rent to the seller. This is usually agreed upon in the sale agreement.
- Transfer Costs:
- The buyer may also need to pay additional transfer costs, which include administrative fees for the conveyancing process and disbursements incurred by the attorney, such as postage, petties, and bank charges.
- Mortgage Initiation Fees:
- If the buyer obtains a mortgage, the bank may charge a mortgage initiation fee for processing the loan application.
- Insurance:
- The buyer should also consider the costs of homeowner’s insurance, life insurance (if required by the mortgage lender), and any other relevant insurance policies.
Shared Costs
- Pro Rata Rates and Taxes:
- Depending on the date of transfer, rates and taxes may be apportioned between the buyer and seller. This ensures that each party pays their fair share for the period they own the property.
Conclusion
Navigating the costs associated with the sale of immovable property can be complex. It’s essential for both buyers and sellers to understand their financial obligations clearly. Consulting with real estate professionals, including agents and conveyancing attorneys, can provide clarity and ensure that all costs are accounted for and appropriately managed.
By being informed and prepared, buyers and sellers can ensure a smoother transaction process and avoid unexpected financial burdens.
