How to Limit Delays in the Transfer Process

In any property transaction the purchaser, to a large extent, holds the key to a swift completion of the entire transfer process. Unfortunately, should it be his/her intention, a purchaser is well positioned to delay the process if a deed of sale does not prevent, or at least limit, potential delaying tactics. Fortunately, the majority of purchasers are keen to co-operate and contribute towards the speedy completion of the transfer

None of the actions required of a purchaser can take more than a couple of minutes. How long can it really take to scan and e-mail a couple of pages in order to comply with FICA (1 below), or to pay the agreed deposit, or to read and sign standard transfer documents (or bond documents) or to pay the relevant transfer costs (or bond registration costs?

The obvious solution is of course to comprehensively describe the various obligations of the purchaser in the deed of sale and to ensure that it adequately empowers the seller to enforce strict compliance with each obligation within a specified time frame, i.e. the shortest possible time whilst at the same time still being reasonable in order to be legally enforceable.

Amongst others, it will be expected of a purchaser to take the following 6 steps during the approximate 10-week process:

1. PROVIDE FICA DOCUMENTATION

Despite the important prescriptions of the Financial Intelligence Centre Act, 38 of 2001 (“FICA”), a number of pre-printed offers to purchase currently in use still do not make provision for compliance with the said Act. Perhaps the seller should insist on a clause being inserted in the deed of sale that provides for the required FICA documentation to be supplied by the purchaser within 3 – 5 days from the date of having been requested by the transferring attorney.

2. PAY DEPOSIT

A seller should really insist on payment of a deposit by the purchaser, even if it is less than the usual 10% (ten percent). Provide for payment thereof to the nominated transferring attorney within 3 days from date of last signature of the deed of sale (acceptance of the “offer to purchase”), even if a mortgage bond still has to be obtained. In the event that the application for a mortgage bond is declined, the deposit with interest, if any, can be repaid to the purchaser by the transferring attorney.

It can of course be stipulated that the deed of sale is subject to payment of a deposit. In such an event the deed of sale will then only come into operation once the deposit has been paid, i.e. the suspensive condition has been complied with. A purchaser’s failure to pay the deposit in time will immediately and without further notice render the deed of sale null and void. This will most probably not be a suspensive condition favoured by the majority of estate agents but think of it, it might ensure a quick resale of the property to an alternative buyer from which both the seller (and possibly the agent) will benefit. 

3. OBTAIN MORTGAGE BOND

The final grant in respect of an application for a mortgage bond can be acquired within 14 to 21 days. Ideally the deed of sale should not provide for an automatic extension of the time period within which the purchaser is to acquire a mortgage bond once the initial 14 to 21-day period has expired. It should rather be left to the discretion of the seller whether to extend that time period or to enter into a fresh deed of sale with the purchaser containing reconsidered and appropriately adjusted time frames.

4. SIGN TRANSFER DOCUMENTS AND PAY TRANSFER COSTS

Irrespective of whether a purchaser has to call at the transferring attorney’s office for signature of the transfer documents and simultaneous payment of the transfer costs or whether the documents and statement of account are couriered or e-mailed to a purchaser, there is no reason why the latter cannot attend thereto within 5 days. Why not stipulate it accordingly?

5. SIGN BOND DOCUMENTS AND PAY BOND REGISTRATION COSTS

The mere fact that in the majority of cases registration of the mortgage bond obtained by a purchaser is being attended to by a different attorney, does not preclude the seller from providing in the deed of sale that signature of the bond documents and payment of the bond registration costs should be attended to within 5 days from date of it being requested or within a specific number of days from date of issue of the final grant to the purchaser.

6. PAY (BALANCE OF) PURCHASE PRICE OR FURNISH GUARANTEE

For this, a period of 7-14 days can be allowed as it will not adversely affect the process if it is requested in time by the transferring attorney.

NOTICE IN EVENT OF BREACH

Provision should be made, where possible, for transmission by e-mail of notices to the purchaser to remedy any breach as in both instances proof of delivery can be obtained electronically. Delivery can be deemed by the parties to have taken place on commencement of the first business day following the day of transmission of the said notice by e-mail. Such a notice should not allow the purchaser more than another 7 to 10 days within which to remedy the breach.

It is important that the purchaser should be made aware of, and should actually agree to, the fact that notices in terms of the deed of sale will be delivered by e-mail. However, provision should still be made for a domicilium (physical) address where summons can effectively be served in the hopefully unlikely event that it ultimately becomes necessary.

PENALTY INTEREST

Serious consideration should be given to inserting a clause in the deed of sale that provides for payment of penalty interest by the purchaser, for the duration of any delay in the transfer process caused by the latter’s failure to abide by the conditions of the deed of sale. That would be fair considering the fact that the seller has to maintain interest payments on his existing bond, and/or is deprived of earning interest on the investment of the proceeds of the sale, until date of registration of transfer.