HOW NETT PROCEEDS OF A SALE IS CALCULATED

Costs Involved in the Conveyancing Process

When selling a property, there are certain costs that either the Seller or the Purchaser will need to pay. These costs depend on the sale agreement and the type of property being sold.

Costs the Seller Must Pay - How Your Nett Proceeds Are Calculated: Below are the most common costs that the Seller may need to pay or prepare for:

1. Agent's Commission

The seller usually pays the estate agent's commission, as agreed in the Offer to Purchase.
Note: If the sale was done by auction, the purchaser may be responsible for the commission instead.

2. Cancelling the Mortgage Bond

· If there is still a home loan (bond) registered over the property, it must be cancelled before the property can be transferred.

· According to the law (National Credit Act), you must give your bank 90 days' notice of your intention to cancel the bond.

· If you cancel before the 90 days is over, the bank will charge you penalty interest for the remaining days.

3. Bond Cancellation Fees

· Your bank will appoint a special lawyer (a bond cancellation attorney) to cancel the bond.

· The cost is about R7000 and may be more if there is more than one bond.

· This cost is paid from the selling price by the transferring attorney.

4. Rates Clearance Certificate

· This certificate shows that all money owed to the municipality (for rates, water, electricity, and refuse) has been paid.

· The municipality usually asks for 3 to 4 months' advance payment.

· Once the sale is complete, they will adjust the account and pay back any extra money to the Seller.

5. Levy Clearance Certificate (Sectional Title Properties)

· If you are selling a flat or townhouse in a complex, the Body Corporate or Managing Agent must issue this certificate.

· It shows that all levies and charges are paid up to date.

· They may also ask for advance payments, which will be adjusted when the sale is registered.

6. Homeowners' Association (HOA) Certificate

· If your property is in an estate or a complex with a Homeowners' Association, you need a clearance certificate from the HOA.
This shows that you have paid all fees due to the HOA.
They may also ask for advance fees, which will be adjusted after registration.

7. Compliance Certificates

Depending on the property, you may need to provide:

· An electrical certificate of compliance

· A gas certificate (if gas is installed)

· An electric fence certificate (if applicable)

· A wood borer beetle certificate (usually in coastal areas)

These certificates must be issued by qualified contractors, and costs may vary.

8. Lost Title Deed

· If your original Title Deed is missing, your attorney must apply for a certified copy from the Deeds Office.
This costs about R5000, plus a newspaper advert fee of about R2500.