What you need to know around foreclosures and property
Buying a home? Hammond Pole attorney, Jacolene Jansen Van Vuuren, tells us what you need to know about foreclosures of property.
Buying a home is probably one of the most important investment decisions you will make in your life and as such it requires a great deal of thought. One of those thoughts is what you can afford. Not only will you now have a monthly bond instalment to pay, but there are a number of additional costs which include:
- Rates and taxes payable to the municipality
- Electricity and water
- Household insurance (for the contents of your home) and homeowner’s insurance (for the building)
- Repairs and maintenance (looking after a garden, painting the house, plumbing problems etc)
- Levies (if you are in a complex/flat)
In addition to the purchase price of the property, there are a number of upfront costs involved in buying a home such as:
- Transfer duty costs which are paid to SARS and is based on the value of the property.
- Transfer fees are payable to the transferring attorney for transferring the property into your name, and are calculated on a regulated sliding scale based on the purchase price.
- If the property is being purchased from a developer, no transfer duty is payable. However, VAT will be payable on the purchase price.
- Bond registration fees.
- FICA fees, electronic instruction fees and postage.
The most common types of properties are either a “Freehold” or “Sectional Title”.
- Freehold or full title properties are free standing houses, cluster houses, etc. Full ownership rights are transferred to you when you own a property, which includes the building and the land it is built on.
- Sectional titles are properties more known as units. When you buy into a sectional title complex, you purchase a section or sections and an undivided share of the common property.
Compliance certificate:
Sellers are legally required to get an electrical certificate and borer certificate, but it’s worth taking the time to conduct a proper examination to ensure that there are no problems with the plumbing, foundations, roofing, etc.
Without the compliance certificates the sales process may be delayed. Developers and sellers are also now legally required to fully disclose the condition of the property to you, i.e. the “voetstoots” clause no longer applies however, it may still be included in sales agreements concluded privately between ordinary sellers and buyers.
Mortgage process:
It will generally take 8 to 12 weeks from bond approval for your transfer to take place. The first step is to appoint attorneys to attend to your bond cancellation (if applicable), the transfer of the property and your bond.
The seller has the right to choose the attorney, although an attorney of your choice can be agreed with the seller. You, the buyer, are responsible for all attorney fees, as well as rates and taxes on the property, which are paid in advance in order to obtain a rates clearance certificate. Once all the documents have been signed by both parties and the costs paid, the documents will be lodged with the deeds office.
Payment to the seller will be made on registration of the bond, normally 7 to 10 days after the documents have been lodged with the deeds office. From the date that the deeds office registration takes place, you are the legal owner of your new property. You will now start paying your bond instalments – as well as insurance, and all rates, taxes and utility costs relating to your home.
For how long will I pay my bond?
Generally speaking, the term of a bond is 20 years, with some lenders offering 30 year bonds under certain circumstances. However, you can make additional payments into your home loan or pay more than your required monthly instalments, thus reducing the time it takes to pay off your home loan. Putting additional money into your home loan dramatically reduces the total amount of interest paid during the loan period.
For Legal Advice on foreclosures of property, call Hammond Pole Attorneys on (011) 874 1800 or email: info@hammondpole.co.za