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Sellers: Are you safeguarded in the Deed of Sale you have just signed?

03 Apr
Over the past few weeks we have noticed some inferior deeds of sale come before of us. Once a Deed of Sale is signed which turns out to be problematic in the final execution and transfer process, it can be very difficult for the Conveyancing Attorney to do remedial work to save the transaction and hence ensure a smooth transition. This can results in a delay to transfer the property. It is very important for Sellers to obtain a legal opinion on the deed of sale, BEFORE, they sign the agreement and not to place 100% reliance on their Estate Agent. Sometimes the problems that arise are purely due to a lack of knowledge on the part of Seller coupled with a lack of knowledge or technical expertise on the part of an inexperienced agent.
FREE SERVICE –  BEFORE YOU SIGN
We are therefore offering our existing client sellers a FREE SERVICE. This free service entails the scrutinizing of the Offer to Purchase BEFORE you sign it to make it an agreement  that is binding on yourself. So what are the permutations that a Seller needs to know when the Offer is put under your nose?
Here is a list of some of the pitfalls to be wary about:

1. When do I get my money? 

On the whole this appears to be a relatively simple question. Upon registration of transfer of your property into the Purchaser’s name, the conveyancing attorney  will do the  final statements of account, send it to you and pay you out when the funds appear in our trust account. This payment can happen either on the day of transfer or the next day especially where guarantees are involved as issued by the Purchaser and his bank.

Seems simple on the face of it. – but how is that purchase price made up and where does it come from? This is where the Seller needs to be careful and aware of what he is signing.

Your purchase price is made up of (preferably) a deposit and a balance purchase price.

The deposit comes in soon after signature . Deposits are good, as it shows a sign of good faith and that the Buyer means business.

The Balance of the Purchase Price can get complicated.

If the estate agent tells you that the Purchaser is selling his property then you must be alert. This is where serious complications can arise and a possible delay in the registration of your property.

Has the Purchaser sold his property already?

If so, is that sale subject to a suspensive condition? If it is, by when will that suspensive condition be fulfilled? What does this mean in plain English? Your purchaser A may have sold his property to his Purchaser B who has sold his property to his Purchaser C all subject to bonds and/or further sales for example.

All these deals are financially linked to each other and are dependent on each other and impact directly on your sale and your money arriving on time.

It is no use that your estate agent tells you that the properties are sold and that everything is fine. Your agent must ascertain at what stage each and every sale is at. And most of the time other estate agents are involved.

Please contact us NOW if you are in a situation like this or as soon as you are so that we can ascertain the status of these linked deals and report back to you.

Just recently  we had a client that did not even realize the number of linked transactions below his. The client said,“ I did not even know about that transaction!!  What has that got to do with me?” The answer is EVERYTHING TO DO WITH YOU.

He was referring to the third sale after his and that sale was the sale that held up all the other linked transactions, all being financially interconnected. The Seller therefore received his money late.

2. What do I do in this type of situation? 

Our recommendation :

Ensure that there is a 72 hour clause/3 day clause written into your contract which allows you to receive a competing offer from another new buyer which has to then be presented to your first, original buyer. Your first buyer then has 72 hours or 3 days to either  comply with his suspensive conditions or waive them depending on how the contract is specifically worded. If not, then the competing offer wins the day and the first sale is null and void.

Contact us for the full and complete wording and DO NOT DELETE THIS CLAUSE – without checking out the consequences of such – Please do not allow for this clause to be deleted  as the  agent may be  protecting the  buyer.

This can arise particularly where there is NO sole mandate involved.

Why? Because the estate agent does not want competing offers fighting against his or her offer and on an open mandate this can occur. Another agent can bring a full asking price cash offer which you will definitely accept. Then the first agent potentially loses out as his or her buyer has 72 hours to waive the suspensive conditions and may not be able to do this. If the first buyer cannot do this it is goodbye to that buyer and hello to the full asking price cash buyer!!! First agent loses all commission, second agent gets all the commission.

So insert that 72 hour clause to protect your interests- the sale of your most valuable asset!!!

And phone us when that competing offer arrives. IMMEDIATELY. We shall ensure that it is properly submitted to your first buyer as stipulated in the first contract.

3. Sectional Title: Know what you own!! 

It is important for Sellers to understand what they own especially when it comes to exclusive use areas. If you cannot answer as to how you own your exclusive use areas and the agent is unsure, please contact us immediately. Exclusive use areas are not necessarily in all title deeds and could be owned in terms of the Sectional Title Rules. We shall advise YOU!!

If you do not know about a real right of extension registered over your Scheme do not expect the estate agent to know. PHONE US IMMEDIATELY.

A real right of extension allows a Developer or the Body Corporate to extend the Scheme either by the addition of further buildings, a horizontal extension or vertical extension to an existing building reserved for a period of time e.g. 25 years.

This real right of extension MUST BE DISCLOSED  in the Deed of Sale BY LAW. If not, the Purchaser can walk away from the transaction. It is best to ask us to investigate this on your behalf BEFORE the contract is signed. We already are doing this for some estate agents who do not have access to this information.

4. Alterations or Extensions to your Property. 

Please always do this in accordance with law by adhering to your title deed conditions and Council Regulations. Building Plans must be approved by the Council. Your architect will guide you.

If you are doing some kind of Sectional Title extension to your flat it is highly suggested that you contact us to ensure that this extension has been correctly registered. We have had a situation where this was not done, there was terrible technical misunderstanding of the issues at hand and the result of this was that the client had to lose a part of the sale proceeds by way of a retention of the purchase price- a substantial sum of money.

Again CONTACT US WHEN IN DOUBT.

 
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Posted by on 03/04/2014 in Property

 

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