Arguably the most important document in the whole transfer process is the Offer to Purchase or Agreement of Sale the preparation of which is normally entrusted to the Estate Agent for completion.
Very frequently the Conveyancers receive Offers to Purchase which have been poorly completed by Estate Agents lacking relevant information which often results in delays, addendums, deletions necessitating initialling by all parties concerned and sometimes resulting in costly litigation.
The document is important as the rights and obligations of both Seller and Purchaser are set out in the Agreement of Sale for e.g. if the sale is suspensive on the Purchaser obtaining a bond, the period for the Purchaser to do so must be stipulated. Frequently there is a Clause extending the period to obtain such bond finance as the banking institutions have onerous requirements in obtaining a loan due to legislation such as the National Credit Act which can delay the approval process.
If the Purchaser is unable to obtain a loan within the stipulated period or extended period as the case may be, the sale agreement is of no force and effect and it is as if the parties never contracted with each other and any monies paid by the Purchaser such as a deposit would have to be refunded.
From the transfer attorneys perspective the following information is very important to be able to proceed with the transfer process:-
• The place and date of the completion of the acceptance of the Offer by the Seller is very important as it determines when the contract came into force. It is this date that must be inserted in the Deed of Transfer which is to be lodged in the Deeds Office and becomes the Title Deed containing the Purchaser’s lawful title to the property;
• The date of conclusion of the agreement is of importance to determine when penalties on transfer duty come into play as transfer duty or a deposit therefor is payable within 6 months from date of conclusion of the agreement.
• The date of acceptance of the Offer is also relevant in regard to payment of the deposit by the Purchaser, bond approval or provision of guarantees as these milestones normally occur within stipulated periods from date of conclusion of the Agreement.
• Parties to the agreement must initial each page as must the witnesses and full signatures must appear on the last page above the designated section for Sellers, Purchasers and witnesses.
• If the parties are married in community of property or if the Seller is married by the laws of a foreign country the assistance of the spouse is required and the spouse must also co-sign the agreement.
• Offers to Purchaser are often not witnessed and omission to have the agreement witnessed could be of relevance in the case where either party denies he or she signed the agreement which if shown to be the case will absolve that party of any obligations under the agreement.
• Important dates such as the period for obtaining a bond and provision of guarantees are of paramount importance in determining the obligations of the purchaser to secure the purchase price. Other frequent omissions resulting in addendums and even disputes is the failure to provide occupational rental to be paid should the Purchaser take occupation prior to transfer or the Seller continue to occupy the property after the transfer has been passed to the Purchaser.
• Offers to Purchase often do not have an information sheet which should appear as an annexure after the page containing the signatures of the parties and witnesses.
• The information sheet should contain inter alia the contact details of the parties, email addresses, telephone numbers, Vat or tax numbers required by SARS, the Rates Account number for the property, the name of the Banking Institution which holds the existing bond/s and the relevant bond account number. This enables the transferring attorneys to obtain cancellation figures expeditiously from the existing bondholder and the title deeds.
• Sectional Titles: In the case of the Unit being sold with Exclusive Use Areas, the Seller ought to be questioned if there are such exclusive areas such as Parking Bays, Maids Quarters, Gardens and Storage Rooms and these should be reflected in the in the Offer to Purchase to be sold.
• The information sheet to such Offers to Purchase should contain the contact details of the Managing Agents of the Body Corporate of the Scheme.
• Gas Conformity Compliance Certificate: You are no doubt aware that the Machinery and Occupational Safety Act of 1983 requires owners of buildings to hold a certificate of compliance in respect of the electrical installation. This has now been extended by recent amendments to the regulation.
• Estate Agents should immediately:-
• a) Check for the existence of gas appliances in any of the properties they have a mandate to sell;
• b) Ascertain who, among the dealers in gas appliances in their area, are authorised persons registered with LPGAS, and who are competent to issue Certificates of Conformity;
• c) Advise all Sellers whose properties do have a gas installation, of the need to obtain a Certificate of Conformity, and supply them with the names and contact details of authorised persons in their area;
• d) Make provision for the Seller to obtain the Certificate of Conformity in the eventual Sale document, should a gas appliance have been installed in the property sold. The cost of obtaining the Certificate (and the cost of any work required to render the installation safe and leak free) will be for the Seller’s account.
Indications are that insurance companies may seek to avoid liability for damage caused to a property by a defective gas appliance, should there be no valid Certificate of Conformity therefor. This being the case, it won’t be long before banks granting the Purchaser the mortgage finance to purchase property will require a copy of the Certificate of Conformity, should a gas appliance have been installed thereon.
Estate Agents should, therefore, ensure that a certified copy of any Certificate of Conformity is supplied to the transferring attorneys.
OUR FORTHCOMING BULLETIN WILL DEAL WITH ELECTRICAL COMPLIANCE CERTIFICATES AND ELECTRICAL FENCING CERTIFICATES IN TERMS OF REGULATION 12 (5) (b) OF THE ELECTRICAL MACHINERY REGULATIONS