Financial Services
    10 October 2019


    Read this before becoming a homeowner

    Buying a home is a complex business and there are a number of legal aspects to consider before signing on the dotted line.

    You’ve scoured property websites, researched your chosen suburb and visited show houses. Now you’ve fallen in love with a house and are already fantasising about what colour to paint the kitchen. Stop.

    Before you get carried away with fancies and frills, bear in mind that buying property is a big decision that comes with a legally binding contract – if it’s accepted by the seller, you can’t simply change your mind the next day.

    What to know before you sign an Offer to Purchase

    Ask for copies of the title deed and diagram, any existing lease agreements, approved building plans, and any other relevant information (such as zoning, town planning or municipality requirements). These documents can be taken into consideration when negotiating the price.

    If you are buying in a sectional title complex, request the financial statements to ensure the property is well-managed by the body corporate and is in good financial standing with its creditors. Also, bear in mind that the purchase price you pay for your property is not the end of it – you need to shell out considerably extra for the deposit, transfer duties, conveyancing fees and deeds registration fees. If you are applying for a bond, your bank insists you have homeowners’ insurance.

    What is an Offer to Purchase?

    This is a legally binding document and, by law, your estate agent must ensure you understand the legalese in the document. In your Offer to Purchase, you will need to give a date that you intend to move into the property (occupation date). If no date is set, the seller has the right to remain in the property until it has been registered (transferred) into your name and the seller has received funds from the sale. At this point, you usually assume all risks and responsibilities associated with the property. If you take occupation before the transfer takes place, you will pay monthly rent (occupational rent) at a rate both parties have agreed to. 

    What is a Deed of Sale?

    Once your Offer to Purchase is signed by the seller, it becomes a Deed of Sale. However, if you need a bond to buy your home, the Deed of Sale will become binding only once your bond has been approved by the bank. A conveyancer (usually appointed by the seller) will then prepare all the necessary documents for the Deeds Office. Just before the documents are submitted to the Deeds Office, you will have to pay the transfer duty and registration costs upfront. Property can be registered in the names of multiple individuals or in companies and trusts. Speak to a qualified financial or tax advisor about the best scenario for your personal situation.

    Did you know you need life insurance when you buy a house? This will ensure your debts, including your mortgage, are settled so that your loved ones aren't liable in the event of your death. Vodacom's Life Cover starts from as little as R92 a month. Click here to find out more.

    Header photo by Tierra Mallorca on Unsplash