Checklist when selling a property! (Updated 4 Feb 2023)
After reading this article you will know:
- Before successfully selling a property, what compliance certificates do you need?
- Why do we need approved building plans and how can we obtain their approval?
- How does SPLUMA play a role in the process of obtaining a SPLUMA certificate and what are the necessary requirements?
- Why does the law require you to complete a defects list and what is the purpose of this document?
Tips on the Checklist when selling your Home!
When selling your home, ensure you check a couple of boxes before the new owner can register the property successfully. Not checking all these boxes will delay the sale of the property and also prevent the transfer of ownership to the new owner. To ensure optimal preparation, begin checking off this list prior to securing a buyer for your property.
When everything is in order, the transfer of a property typically takes two to three months.
However, when documentation is outstanding, this can take much longer. There have been instances where the transfer of a property has taken up to a year.
The objective of this article is to help sellers get their ducks in a row so that when they take an offer on the property, they don’t delay the transfer process, and everything can move along smoothly.
So, let’s start with the checklist.
- Compliance Certificates
- To get the property transferred in the buyer’s name, the seller is responsible for securing a couple of compliance certificates.
- An electrical certificate of compliance (Also known as a COC)
- This is to certify that the electrical wiring of the property is in an acceptable condition for habitation.
- Only a certified electrician has the authorization to issue this; no one else is permitted to do so.
- Depending on the size of the property, the electrician normally charges between R500 and R3000 for the issuing of the certificate.
- The electrician must quote for any major electrical work before issuing the certificate of compliance.
- Consider determining the electrical costs to take them into account when setting the asking price.
- An electric fence certificate of compliance
- The second certificate is an electric fence certificate of compliance.
- This is applicable for properties with an electrical fence installation.
- A certified electrician may also issue this.
- A gas certificate
- The seller is responsible for obtaining a gas certificate of compliance when there is gas installed.
- A certified gas installation company can provide this.
- Beetle-free certificates
- Authorities issue beetle-free certificates in coastal regions.
- However, this certificate is not a legal requirement.
- Water Installation Compliance Certification
- Sellers in Cape Town must provide a certificate of compliance for their water installation.
- This is to confirm the national building regulations are followed for the water installation on the property.
- Rates Clearance Certificate
- The transferring attorney will obtain the rates clearance certificate from the municipality, for the seller.
- This confirms that the property has paid up-to-date rates and taxes, as reflected in this certificate.
- The seller is normally required to pay three to six months of rates and taxes in advance.
- This is to ensure that the seller keeps up with their rates and taxes payments until the property registers in the new owner’s name.
- If the property registers in the new owner’s name before the three to six months are up, you can request a refund from the municipality.
- Be aware that following up with the municipality multiple times is necessary, as this is a lengthy process.
- If the seller is unable to pay due to a lack of funds or falling behind on taxes and rates, the transferring attorney can deduct any outstanding amounts from the property sale proceeds.
- Alternatively, the seller can also apply for bridging finance to make the outstanding payments.
- Bridging finance requires guarantees that the property sale is in progress, and this type of loan normally also comes at a big interest rate.
- Levy clearance certificate
The conveyancer asks the trustees of a sectional title scheme for a levy clearance certificate when selling a property, as part of the transfer process.
The seller has fully paid up their levies, as confirmed by this levy clearance certificate.
The body corporate requires the seller to pay their levies three to six months in advance so that they can issue the levy clearance certificate.
This is to ensure that your levies are up to date throughout the transfer period.
Should the property transfer in the buyer’s name before the three to six months are up, you will get a refund from the body corporate.
The managing agent of the scheme will usually manage and refund this in the majority of cases. You will just have to follow up on your end.
- Approved building Plans
Tips on getting Approved Building Plans:
- In earlier years, municipalities were not so strict when it came to approved building plans.
- As a result, many homeowners extended and renovated their properties without approved building plans.
- Municipalities have been enforcing stricter regulations on approved building plans in recent years.
- Failing to secure approval may leave the new owner unable to register the property.
- The buyer may only request approved building plans from the seller if there is a clause in the offer to purchase that states that the buyer may request it.
- The seller will sell the property with the missing building plans as latent defects if there is no such clause, meaning that the defects cannot be seen.
- It is then up to the purchaser to prove that the seller did not know that there were no approved plans.
- If the buyer applies for a home loan, the bank may only grant the home loan subject to approved building plans.
- If there are no approved building plans, the sale may fall through. The seller will then be responsible for obtaining the approved building plans.
- The seller can consult an independent architect to assist in drawing up of the plans before submission to the municipality for approval.
- The municipality requires architects to know the necessary safety regulations for their plans to be approved.
- A SPLUMA Certificate
- In 2015, lawmakers introduced new legislation that mandates municipalities to comply with SPLUMA (Spatial Planning and Land Use Act).
- The local municipality requires sellers to apply for a SPLUMA certificate when they intend to sell their property.
- At the moment SPLUMA is dependent on municipal bylaws.
- This means every municipality in South Africa decides how strict or relaxed they are with regard to the implementation of the SPLUMA regulations.
- Implementing these regulations fully takes time, and it is important to note.
- With the latest update to this article, SPLUMA is in the process of a national rollout and not just on the municipal level.
- Your local municipality’s relaxed nature may not currently enforce strict spatial planning for your property, but it could become enforceable when you sell in the future.
- The best is to ensure that your property complies with these SPLUMA regulations.
In order for the seller to obtain the SPLUMA certificate from the local municipality, he has to:
- Provide the municipality with a signed affidavit that all building plans for the property are in order and filed with the municipality
- All rates and taxes are paid up in full
- Correctly zoning the property is necessary.
- The application for the SPLUMA certificate can take very long and may delay the transfer process.
- We advise sellers to start the process as soon as they decide to put the property on the market.
- Completing a Defects List
Getting a Defects List:
- The seller must complete a defects list, despite selling the property ‘Voetstoots’ (as is).
- This is a list of all the defects to the property that the seller is aware of.
- Issue a defects list to any interested buyer who wants to make an offer on the property.
- The real estate agent will often have a defects list template that he will share with the seller.
- Inspect the property one room at a time and list everything that is not in perfect working order.
- Once completed inside, go outside and take a walk around the house, inspecting the property from the bottom, up.
- This defects list is not to scare potential buyers.
- It is for buyers to make informed decisions about what they are purchasing.
- You must disclose every defect to the buyer to the best of your knowledge, as the law requires you to do so as the seller.
- Do not hide anything from the buyer.
- Hiding a defect can lead to legal consequences and a potential sale reversal if the buyer later proves it.
Selling a property requires ticking multiple boxes and incurring significant costs to obtain clearance certificates and building plans. I know it is not ideal, but at least now you know what to expect and can plan accordingly. Being clear empowers, and forearming oneself with information is being forewarned.
Ensure your asking price accommodates costs related to selling your property by knowing what they are. You can have clarity on the amount of money that you would like in your pocket after the sale of the property.
All the best and good luck with the sale of your property.