How to ensure your property is compliant for a quick sale

With the lower interest rate and more active buyers, it is a great time for sellers to take advantage of the selling opportunities in the market, but sellers must ensure their properties are compliant so as not to delay any offers, or the sale.

When there is  plenty of stock to choose from, sellers will not want anything which may cause a delay. Non-compliance can cause delays while full compliance can considerably speed up the sale and transfer process.

Sellers should chat to the agent and possibly make use of a service provider for compliance vetting, and ensuring key aspects such as building plans, zoning conflicts, title restrictions, and servitudes are resolved.

The most important compliance issues generally include:

#1 - Installations. Various installations require Certificates of Compliance before the property can be transferred. While the various municipalities differ in terms of specific requirements, these usually include electrical and water installations, electric fences, and possibly also solar and gas installations. Certificates must be valid to cover the transfer period.

#2 - Building plans. While not necessarily a precondition, it is generally recommended that the seller obtains a copy of the building plans and ensures that all building works are approved and compliant. Anything which is not approved must be corrected, and signed off. Sellers must also ensure that all zoning requirements are met, and that there are no encroachments insofar as boundaries are concerned.

#3 - Disclosure of defects (Condition of Property Report). In terms of the Property Practitioners Act, sellers must disclose all known material defects, both patent (obvious) and latent (hidden) to prospective buyers before they make an offer. The Act mandates sellers to complete and sign a mandatory "Condition of Property Report" which must be annexed to the selling agent's mandate, as well as the agreement of sale.

#4 - Rates Clearance Certificate. This certificate is required before the property can be transferred, and is usually obtained by the attorneys. It requires that all outstanding monies owed to the local municipality in terms of rates as well as utilities are settled in full, and most municipalities also require the lodging of funds to cover a period of time that it will take before the property is transferred. The surplus is refundable after transfer.

#5 - Other compliances. Some areas may also require additional compliance certificates which could relate to the safety of swimming pools or a lightning conductor on thatched roof properties in certain areas. Again, these are needed before the transfer can be effected and must be valid for an adequate period of time.

The Rates Clearance Certificate issued by the city council certifies that there are no outstanding funds due to the municipality at the time of the registration of transfer to the purchaser. This certificate is a requirement in terms of the Deeds Registries Act and must be lodged in the Deeds Office. The Registrar of Deeds will not register the transfer of a property unless the conveyancer lodges a valid RCC along with other required documents at the Deeds Office.

Rates Clearance Figures

The conveyancer will make application to the city council for the issuing of rates clearance figures. Rates clearance figures are comprised of all arrears amounts for rates, taxes, electricity, water, sewerage, and refuse, as well as an advance payment covering a period of 60 days being the period of validity of the rates clearance certificate.

Whose responsibility is it to obtain a rates clearance certificate?

It is the seller's responsibility to settle amounts due in order to obtain the RCC. Upon request, the seller must pay the conveyancer and not the city council directly. The conveyancer will then pay the city council to ensure that the payment is linked to the application number in respect of the transfer as well as for the purposes of expedition of the issuing of the rates clearance certificate.

Once the conveyancer has paid for and obtained the RCC, the seller's account at the city council will be in credit and the seller will no longer be required make any further monthly payments to the city council prior to transfer.

Once registration of transfer has been completed, the conveyancer submits a refund form to the city council in respect of any credit that maybe be due to the seller. This usually occurs when the registration of transfer takes place prior to the expiration of the 60-day period. The city council takes approximately four to seven months to reconcile the seller's and purchaser's accounts and pay the refund.

#6 - Buyer finance. If the buyer is unable to secure a mortgage loan, it is delayed, a lower amount is offered, or the buyer is unable to secure the required deposit, it can delay the sale, or it may even fall through. This is why sellers should ensure the property is in top shape so that the banks can find value while the buyer must ensure their financial position is such that they can secure the required mortgage loan, and deposit.

#7 - Disputes about fixtures. Disputes about what is included in the sale can also cause delays, or even sink the deal. If there are for example specific fixtures on display when the buyer views it, but these are actually excluded, it is recommended that any exclusions are clearly stipulated when buyers view the property. Better yet rather remove any special items before the property is viewed to avoid potential disputes.