Transfer of Property1. SIMPLE TRANSFERWhen a seller concludes an agreement of sale for his property, he should be in posse...
the Deeds Office with the Declarations, Power of Attorney and Rates Certificate, the other is returnedto the conveyancer.N...
As far as the seller is concerned, a good dose of patience is a necessity. From the time you decide tosub-divide and sell ...
purchasers. The process of share transfer can be undertaken in an afternoon as opposed to the lengthydelay involved in the...
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Transfer Of Property

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Advice for property buyers.

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Transcript of "Transfer Of Property"

  1. 1. Transfer of Property1. SIMPLE TRANSFERWhen a seller concludes an agreement of sale for his property, he should be in possession of the Deedfor the property which will be in his name. The current Deed in the sellers name and the Agreementwill go to the conveyancers who will then be able to draft a new Deed in the name of the purchaseralong with other documents required by the Deeds Offices to effect transfer, such as declarations forStamp Duty purposes by both parties and a Power of Attorney by the seller authorising theconveyancer to deal with the transfer.The draft Deeds are signed by the attending conveyancer, the declarations are signed and witnessed bythe respective parties and the Power of Attorney is signed by the conveyancer and the seller andwitnessed.A Rates Clearance Certificate has to be acquired from the local authority for a period of six monthsduring which transfer is likely to occur. To obtain the certificate an estimated rates fee for the sixmonth period will have to be paid. This fee is usually paid by the Purchaser as the Seller is required topay his rates on a monthly basis up until the date of transfer.The conveyancers will also require that their Statement of Account be settled before they lodge thedocuments for transfer. This statement will include the conveyancers statutory fee, the Stamp Duty,the registration fee and any additional charges. If you want a lawyer to speed up, pay him his fee wellin advance. He will accept the fee but can not, generally, pay it until transfer has been registered. Hisonly option is to hurry up and get your transfer registered. As from the February 2009 5% CapitalGains Withholding Tax is required to be paid by the Seller prior to the conveyancer lodging the deedsat the Deeds Office, If the Seller is over 55 years of age he is able to apply for a tax exemptionproviding it is the Sellers principal private residence.Any property purchased after dollarisation isliable for 20% Capital Gains Tax on the GAIN.As the sellers representative, the conveyancer is also responsible for making sure that the entirepurchase price is secured to the sellers satisfaction, be it cash in the lawyers trust account, guaranteesfrom building societies or written confirmation from the seller that he has received all of the purchaseprice. A good conveyancer will never lodge documents for transfer unless he has done this. Basically,once these issues are settled, the legal practitioners will lodge the Declarations, the Power of Attorney,the sellers original Deed, the draft Deeds in duplicate, the Rates and Tax Clearance Certificate and acheque for the Stamp Duty and Registration Fee, in the Deeds Office for registration.Once in the Deeds Office, the documents are checked to ensure they are in order. If they are not, theywill be returned to the conveyancer with a query, for correction and relodge. If the documents are tothe pleasure of the Registrar of Deeds, the required amendments are made in their land register andrecords, i.e.: the sellers Title Deed is cancelled and the purchasers Deed is registered. The Registrar ofDeeds will sign the draft Deeds (in the name of the purchaser) and date them. One copy is retained in
  2. 2. the Deeds Office with the Declarations, Power of Attorney and Rates Certificate, the other is returnedto the conveyancer.Nothing brightens a conveyancers day as does a registration because he can now claim his fee and tobe honest, its really the only good news he can give the parties during the entire transfer process. Fromthe date placed by the Registrar of Deeds on the new Deed, the seller is no longer owner of theproperty and becomes entitled to the purchase price and the purchaser becomes the new legal owner ofthe property. The conveyancer will release the purchase price to the seller if he has it in his trustaccount, or will request payment in terms of a guarantee from a building society when a bond isinvolved. He will also supply the purchaser with his now valid Title Deed.There are only ever two valid deeds to a property, one lodged permanently in the deeds office, theother with the owner. That deed is the holders claim to ownership.2. TRANSFER WHERE SUB-DIVISON IS INVOLVEDOften a person owns a large piece of land for which he has a title deed, but he does not necessarilywant to sell the entire property. Instead he may only wish to sell a portion of it. To sell that portion ofhis land he has to have a sub-division done. As mentioned earlier, every property has a diagram,normally contained in one of the older title deeds. If a person wants to have a sub-division done thatdiagram deed is required so that the surveyor general can do the necessary deduction of the soldportion of land both from the diagram deed and his general plan.The process is long, tedious, beaurocratic and often frustrating. The first step is to get a surveyor to doa diagram of the proposed sub-division. The sub-division must be within the limits set for the area bythe local council. This diagram is attached to completed application forms and submitted to thedirector of works for his approval and for a permit to be granted. If approved, the permit will allocatethe sub-divided portion a unique stand number and set conditions and requirements for the proposedsub-division. From here the land surveyor will be able to draw property diagrams with measurements,size and stand number among other things. These are then submitted to the surveyor general for hisapproval. Once approved he will release the diagrams duly signed as authorised, to the surveyor. Thisprocess normally takes in excess of 6 months. The approved diagrams are then incorporated in the titledeeds which are prepared by the legal practitioners. We thus have the sub-divided portions first titledeed and diagram. Once the approved diagrams are received by the legal practitioners, the normalprocess of transfer is undertaken by the conveyancers as previously discussed. In a normal transfer thedeeds are released once the deeds office has completed the registration process, however where sub-division has occurred, the deeds are again sent to the surveyor general after the registrar of deeds hasregistered the transfer. The purpose of this is to allow the Surveyor General to do the necessarydeductions and amendments to his diagrams. This normally adds another 6 months to the registrationprocess.From this its clear that the process is a lengthy one. From a purchasers point of view, it may takeyears before you get your hands on a deed and it also presents problems where bonds are involved.When purchasing a portion of sub-divided land without its own deed, its always wise to ensure that theseller has a permit for the sub-division from the director of works and approved diagrams from theSurveyor General.
  3. 3. As far as the seller is concerned, a good dose of patience is a necessity. From the time you decide tosub-divide and sell to the time you receive any money may be ages, as most purchasers will onlyrelease funds once transfer has gone through. The best approach is to get the permit and approveddiagrams before marketing your stand or entering into an agreement.Sale of a piece of sub-divided land without title is always financially tricky for the seller. From thepurchase price is deducted a endowment tax which is specified in the sub-divisional permit. The selleris also responsible for paying the surveyor and fees for the permit and other applications. Theendowment is only due upon transfer. From the balance Capital Gains Tax has to be paid too.More or less the same process is involved where a person wants to consolidate two pieces of adjacentland. The purpose of this is normally so that the owner can build across the former dividing linebetween the two stands, ordinarily not permitted.3. SECTIONAL TITLEZimbabwean common law is clear on the point that the owner of a piece of land is also the owner ofany building within the confines of that land. This principle holds fast in respect of houses and mostproperties in general. Problems do however arise in situations such as private ownership of flats andhighrised commercial buildings as only the owner of the land could own the building.Thus the law has changed allowing a person to sell an undivided share in a piece of land along with anexclusive right of occupation. To do this a notorial deed is registered against the deed specifying,among other things, the amount of shares, the rights and duties of each share owner and theadministration and maintenance of the property. Each owner of undivided shares is bound by thenotorial deed as are their successors in title.Due to the sectional title process a person can own a flat or office in a building in which other peopleown the other flats/offices. The owner gets a title deed and it is possible to raise a bond against thepurchase of an undivided share in a property.4. SHARE TRANSFERTransferring a property costs a lot of money, especially for the purchaser, who not only has to comeup with the purchase price but also has to pay the stamp duty and fees for the registration of thetransfer. This accounts for 6%-8% of the purchase price.The method of share transfer overcomes these costs. Share transfer arises where the property is ownedby a company as its sole asset. Instead of transferring the property from the company to the purchaser,the company retains ownership of the property and the shares in the company are sold to the
  4. 4. purchasers. The process of share transfer can be undertaken in an afternoon as opposed to the lengthydelay involved in the conventional method of transfer. The costs involved are also substantially less,and normally only involve paying on accountant to oversee the process.The disadvantage is that the purchaser does not get a deed in his personal name but one in the name ofthe company, of which he is the shareholder. He then has to take on the responsibility of running thatcompany and keeping the necessary records and registers. But there is nothing preventing thepurchaser from later transferring the property into his personal name, when he can afford the cost oftransfer, and rendering the company defunct.From the purchasers point of view, its important to ensure that the company in which he is about toacquire shares, has no other assets or, especially, liabilities. It will be a good idea to get an accountantto check the companys records and accounts. The cost of the accountant is justified by the risk ofbuying an unstable company.

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