Don’t let deeds office delays derail your homebuying journey

Buying and selling a home is an exciting but often complicated process. As soon as you sign the offer to purchase and the bank approves your bond, it can take up to three months to register the transfer of the home. Unfortunately, there can be a delay in the process for various reasons, from administrative backlogs to consecutive public holidays that reduce the deeds offices’ operational hours. Unforeseen deeds office delays can be frustrating as well as costly for both buyers and sellers waiting for a home’s title deed to be signed into the new owner’s name.

Costly delays

If you've sold a property, you won’t be able to access the funds from the sale until the property transfer is registered. In addition, all the debt on the property must be settled before the transfer. So, if you intend on settling outstanding debt with the proceeds of the sale, it will only be possible once the transfer is registered. This could result in additional fees and charges. Furthermore, as the seller there is a legal requirement to continue with the bond payments until registration is complete. So delays at the deeds office could incur extra costs and interest on the bond settlement amount.

If you require funds from your access bond on the property you are selling it is advisable to access these funds prior to cancellation figures being issued by the bank. In the meantime, if the buyer has already paid money into the transferring attorney’s trust account – and the account is interest-bearing – any interest accrued during delays will be due to the buyer.

On the seller’s side, after issuing bond cancellation figures, they will no longer have access to additional funds from their access bond. Sellers should plan ahead for this, especially if they anticipate needing funds during any delays in the transfer process.

It’s therefore important to know how to mitigate the financial risks of being in limbo by deeds office delays.

Apply for property bridging finance

This finance offers a short-term cash flow solution for property transactions in limbo. The bridging financier releases a portion of the funds which would be available on registration of transfer, against an undertaking for payment from the conveyancer. To qualify for this finance, you need the offer to purchase, guarantees that there are enough funds available, a rates clearance certificate and a letter of undertaking from your conveyancer. Just remember that this finance solution comes at a cost – usually prime plus. If you have an access bond it could be better to access this money before they issue cancellation figures against your property.

The Legal Practitioners Indemnity Insurance Fund advises that the conveyancer must ensure there is a detailed breakdown of all the financial aspects of the transaction “prior to issuing any undertaking in favour of a bridging finance institution”. Furthermore, the Fund says the conveyancer must ensure that there will be enough funds available on registration, to cover the advance. According to FundingHub, the interest charged for bridging finance is between R1 and R1.50 per R1,000, per day depending on the financier.

Ask about early occupation

Although it is usually only possible to move into a home once the transfer has registered, early occupation may be possible if the home is vacant and if the seller agrees. Although the buyer will have to pay occupational rent, this may be a better option than renting or staying in an expensive hotel while waiting for the deeds office backlogs to ease. Just bear in mind that during early occupation, you are still a tenant and not the owner of the property. Moving times should be fairly flexible while waiting for the final transfer as delays at the deeds office could lead to the buyer and seller having to seek temporary accommodation.

Get your paperwork in order

To avoid any other speed bumps in the transfer process, make sure that all your paperwork is ready and complete. Work with a reputable conveyancing attorney. This attorney lodges all the required documents, as well as the new bond with the deeds office. Attorneys must be fastidious in preparing the documents required to prevent any unnecessary delays. For conventional property transactions, you'll need the following documents:

There are many important steps in the homebuying journey that ensure the smooth registration of the transfer. These include the timeous cancellation of the seller’s bond, the settlement of outstanding municipal debt and the confirmation of compliance certificates.

Finalise the funds

Buyers should also ensure that all the funds needed for the transaction are available so that there will be no further hitches once the deeds office is up and running again. This is where bond pre-approval is helpful, because it involves a credit check that will raise any potential red flags with funding. Avoid making unnecessary purchases at this stage to keep your credit score healthy. Make sure that your tax affairs are also in order.

Prepare for added expenses

If possible, have an emergency fund available in case you need to pay rent on a short-term let while waiting for the deeds office to transfer the bond. It may be that you will need to stay with friends or rent accommodation while waiting for transfer to go through. These costs can be quite high especially if a buyer is relocating from another province.

Wait for the green light before renovating

It’s advisable to hold off on any improvements to a property you have bought until the transfer goes through. This is just in case there is a delay in the registration and you incur other.

As the purchase of a new home is only a done deal once the transfer has been registered, it’s advisable to work with a reputable conveyancer. They can tell you what you need to make the process as seamless as possible. This attorney will work with other attorneys involved in the transaction, as well as with the South African Revenue Service to pay the buyer’s transfer duties. In addition to the collection of documents and liaison with other role players, the attorney will help to navigate any delays in the deeds office. This will give buyers and sellers the peace of mind they need to navigate the registration process.