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Beware Title Deeds Delay

IT can be very risky to buy a home in South Africa in the confident expectation of selling it soon after transfer and speedily registering the property into the new buyer’s name.

Anton du Plessis, chief executive officer of Vineyard Estates, says in fact, any transaction that depends upon the availability of the physical title deed within three months of transfer registering should cater for the fact that in many cases title deeds are taking up to and over three months to emerge from the deeds office.

“Unless a conveyancer specifically requests that the Deeds Office expedites the issuing of the title deeds, the process can take four months or longer, depending on the pace of the Deeds Office,” he says.

In many cases, the seller may not want the buyer to know that he has only recently purchased the property, effected renovations, and then on-sold at a profit. Should he sell a week after taking transfer, the paperwork can be ready within four to five weeks.

The conveyancer would then be in a position to lodge the transaction at the Deeds Office, but would be unable to do so without the physical title deeds. He could then easily wait a further seven weeks for the title deeds.

In current markets, where profit margins on speculative purchases are lower, a seven-week delay, says du Plessis, can cause cash flow problems if the speculator is relying on the transfer to release cash by a specific date.

“I would urge cash buyers who are undecided as to whether or not to register a small bond over the property to make sure that they do not anticipate using the property as security for any borrowing immediately after transfer. Most of the larger lending institutions will not afford credit without the title deed. In fact, even with proof of transfer into the purchaser’s name from a reputable firm of attorneys, banks will seldom budge on this condition.”

“I believe this is right: buyers should refuse to advance any of the purchase price before transfer. The risks and stakes are too high. There are good reasons that the whole process of alienation is so comprehensively legislated, and the handover of funds only effected on actual registration.” — Property24.com.

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