New year, new home

Where do I start when buying a house for the first time?

1. Work out your budget: The first step when you’re starting the process of buying a house is working out the purchase price you will qualify for and can afford. Applying for pre-approval through your bank can be a good initial step in this process as it will offer some clarity on what bond amount you qualify for and will also give insight into conditions of the approval, for example if you will be required to sell any current bonded property before a new bond is registered.
2. Calculate all the fees involved: Next, you should do some research into what costs you can expect to pay for transfer fees, transfer duty payable to SARS and bond registration fees. This information is essential before signing the offer to purchase as it may affect your overall affordability and therefore your ability to meet the terms of the contract. A simple way of determining what fees you can expect to pay is by using transfer and bond fee calculators like those on our website. In addition, it is also advisable to check your credit score as a poor credit score can negatively impact your likelihood of being approved for a bond.
3. Get your paperwork together: There is a significant amount of paperwork involved in any property transfer and delays can often creep into the transfer process due to documents not being supplied when needed. To avoid this, it’s a good idea to preempt the requests for required documentation by getting things in order early. Depending on your circumstances, you’ll need originals and copies of your ID document, marriage certificate, antenuptial contract, divorce order and settlement agreement (if relevant), up-to-date proof of residence, recent bank statements and SARS income tax reference number. Some or all of these documents will be requested by estate agents when entering into an offer to purchase, mortgage originators when applying for a bond, transfer attorneys on instruction to attend to the transfer, and bond attorneys on instruction from the bank to attend to the registration of the bond.
4. Talk to trusted estate agents: Working with experienced and reputable estate agents, particularly for first-time buyers, can also help make the process as smooth as possible. They will be able to provide valuable information, assist with property viewings and assist with completing the necessary Offer To Purchase when the time comes.

Can you buy a new house before selling your old one?

Quite often, someone will be dependent on the proceeds from selling their existing property in order to buy a new one. When entering into an offer to purchase, it is common for the agreement to make provision for this through a ‘subject to sale’ clause. If this clause is not already in the proposed offer to purchase, it can be inserted before signing the document.

There are three common “subject to sale” clauses:

1. Subject to the sale of a property not yet sold: A date is specified by which the ‘subject to sale’ property must be sold and all other related suspensive conditions (such as bond approval) must be met. Failing this, the offer to purchase will lapse.

2. Subject to sale of a property already sold but suspensive conditions not yet met: This clause will be used in cases where the ‘subject to sale’ property has already been sold but the purchaser of that property has not yet met all suspensive conditions (e.g. bond approval). A date will be set by which these conditions must be met, failing which the offer to purchase will lapse.

3. Subject to sale and all suspensive conditions therein met: This clause will be used in cases where the property has been sold, all suspensive conditions have been met and the transfer process is underway. This clause offers the buyer protection should anything cause that transfer to fall through.

Once all the suspensive conditions have been met, the transfer attorneys of the purchaser will make contact with the transfer attorneys attending to the ‘subject to sale’ transfer. They will request guarantees in order to secure the purchase price and make arrangements to link the matters for simultaneous registration, meaning both properties are registered in the respective new owners’ names at the same time. However, it’s not always possible to link the matters and arrange simultaneous registration and in such an instance the ‘subject to sale’ property will be registered in the Deeds Office first.

Similarly to working with a reputable estate agent when beginning the process of finding a property, it is essential to work with experienced and well regarded transfer attorneys who will be able to effectively manage your property transfer and guide you through the transfer process.

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Written by Wessel de Kock

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