A practical guide for first-time home buyers

Purchasing your first home is a big financial and emotional step. Before you jump in, take a moment to think about 7 important aspects when purchasing your first home.

1. Proper inspection of the property

It is important to make sure that, as the Purchaser, you are happy with the current condition of the property. If there are any repairs or improvements that need to be made, these must be specifically included in the Agreement of Sale concluded between the parties as special conditions. This ensures that the necessary repairs and/or improvements are completed before the property is registered in the name of the purchaser at the Deeds Office.

If you later realise that you are not happy with the condition of the property, or if you become aware of a defect that you did not initially notice during your inspection, the Seller may not be obligated to attend to any repairs and/or improvements after the Agreement of Sale has been signed. Property are usually sold ‘as is’, with an implied warranty from the Seller that the property is free from any patent or latent defects, until proven otherwise. Failure to properly inspect the property from the outset can often lead to disputes.

2. Ask for the latest Municipal and Levy accounts

Should either the Municipal account or the Levy account, in the event of a sectional title unit, be in arrears, this can cause significant delays in the transfer process. This is because the  Municipal and Levy rates clearance figures have to be requested by the transferring attorneys, calculated 2 to 3 months in advance, which the Seller must settle in order to obtain a Levy Clearance certificate and a Rates Clearance certificate. The latter is one of the required documents to proceed with lodgment and registration at the Deeds Office.

3. Ask the Seller if you may use your own transferring attorneys 

As a general rule, the Seller has the right to nominate the transferring attorney who will be handling the transfer of the property from the Seller to the Purchaser. It is important to remember that you are allowed to negotiate with the Seller whether you, as the Purchaser, may make use of your own transferring attorney to attend to the transferring process, as you have an established relationship of trust with your attorney. Should the Seller not be inclined to grant your request, your attorneys can still play a supervisory role to you during the course of the transferring process. 

4. Check the title deed for conditions and rules of your Sectional Title Scheme or Home Owners Association (HOA)

Purchasers tend to overlook this important aspect; however, it is important to know which rules and conditions the property is subject to. This is an important aspect as this can affect the manner in which you are allowed to deal with and use the property in the future, whether you intend to subdivide the property, build another dwelling on the property, keep certain pets or animals on the property, or run an Airbnb from the property. 

5. Get the assistance of a competent Mortgage Originator
 
Get a competent and knowledgeable Mortgage Originator involved to assist with your bond and finance applications to banks and financial institutions if you’re buying the property subject to obtaining a loan from a bank or registered financial institution. Purchasers often face strict timelines to obtain bond approval, and Sellers are not always amenable to granting extensions to these periods. It is therefore important to get the assistance of an experienced Mortgage Originator who can assist you to obtain the necessary financing in compliance with the timelines as stipulated in the Agreement of Sale, as non-compliance with this suspensive condition may lead to cancellation of the Agreement by the Seller. 

6. Make sure you are prepared for the costs involved
  
Another crucial factor to remember is that you, as the Purchaser, will be responsible for settling the Transferring Attorneys fee, which will include transfer duty should the property be valued at more than R1 100 000.00, as well as Bond registration fees payable to the Bond Registration Attorneys, should you be purchasing the property with a Bond obtained from a bank or registered financial institution. This factor catches most Purchasers off guard because it’s usually not something they consider, as they sometimes think that the only payment they will have to make is that of the purchase price to the Seller. Please note that both the Transfer Fees and Bond Registration Fees are calculated on the value of the purchase price in line with the Conveyancing Fees Guidelines as published by the Law Society of South Africa (LSSA). 

7. Be sure to insure the property and its contents
 
Typically, the financial institution requires insurance coverage for both the land and buildings as a prerequisite before registering the Purchaser’s Bond. The responsibility falls upon you, as the Purchaser and new owner, to obtain insurance for your household contents and any other potential risks as well. It is crucial not to overlook this aspect, as failing to insure your possessions may have financial consequences if anything happens to your uninsured belongings 

In conclusion, embracing a well-informed and proactive approach by considering the above aspects will greatly facilitate a smooth transfer process and empower you to navigate the complexities of purchasing your first home with confidence. 

It is important to address these considerations thoroughly to safeguard your investment. 

Contact one of our property lawyers, who are dedicated to guiding you through every step of the journey. With their support, you can embark on the exciting adventure of homeownership with peace of mind and assurance.

 

Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy have been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s). 

February 7, 2024
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