Preparing to Sell: Seller Costs To Be Aware Of

Seller Costs That You Are Liable for When Selling Your Property 

Before putting your home on the market, it is necessary to plan ahead for costs, that you as the seller will incur. It is crucial to factor these expenses into your budget, as payment delays may hinder the property transfer process. This may also constitute a violation of the sale agreement. 
In this article, we will focus on the various costs that sellers should budget for in order to complete the transfer of the property. The seller must cover the fees levied by various parties, which will typically include, a conveyancing attorney, an estate agent, the bank, SARS, the municipality, as well as licensed electricians and other relevant specialists where applicable.

Seller Costs: Bond Cancellation Fees

Should the Seller have a  Mortgage Bond registered over his property, he is required to settle the outstanding amount/debt before the property can be transferred to the new owner.  

The seller is also required to pay the bond cancellation fees and any additional fees related to the cancellation. The bond cancellation fee consists of a number of costs:

• Attorney’s Fees: An amount is payable to the bank’s appointed bond cancellation attorney for the cost to cancel the existing bond over the property in the Deeds Office. 
• Early Settlement Penalty Fee: Cancelling your bond within two to three years after taking it out will incur an early settlement fee. 
• Notice Period Penalty Fee: To avoid being charged penalty interest on your bond’s outstanding balance, you should provide your bank with 90 days written notice before listing your property on the market. 
• Premiums for Home Insurance and Life Insurance: The seller must pay several months of insurance premium deductions that would have been deducted from the bond account. This is done to maintain insurance cover for the duration of the selling and transfer process.

Seller Costs: Compliance Certificates 

A number of compliance certificates are needed as part of the transfer process and are required as per the Offer to Purchase signed by the parties. The seller is required to schedule several inspections and cover the cost thereof. Repairs may be necessary to be considered compliant. These expenses will also be for the seller’s account.  

The following compliance certificates must be obtained:

• Electrical Compliance Certificate: Homeowners who are in the process of selling their property are legally required to have a valid electrical compliance certificate (ECC). Without an ECC the transfer of property ownership cannot be concluded. Certificates must be issued by a licensed electrician. Additionally, electrical repairs may be necessary to meet compliance requirements. 
• Electric Fence, Gas, Beetle and Plumbing Certificates: Where applicable, you may also need electric fence system certificates, a gas certificate of conformity, and plumbing and entomologist clearance certificates. Ideally, these certificates should be secured before listing your property for sale.

Seller Costs: Rates Taxes and Levies

A rates clearance certificate is required to transfer ownership of a property from the seller to the buyer. Municipal rates and taxes must be paid before transfer documents can be submitted by the conveyancing attorney to the Deeds Office. 

You will need to pay the total outstanding amount as well as an advance amount of between two and four months, calculated based on the monthly average payable for the last few months. After a period of six weeks after registration of your property, you can apply for a refund from the Municipality.

For sectional title and home owners association properties being sold, a levy clearance certificate is needed from the body corporate or home owners association. Levies payable will be calculated based on an estimation for a one to two month period. Usually, either the transfer attorney, the homeowners association or body corporate will do the necessary adjustments on the levy figures paid and refund the seller a proportionate amount back.

Seller Costs: Estate Agent Commission 

A property can be sold privately by the owner or by an estate agent. The estate agent’s commission is one of the most expensive seller costs. The amount payable is typically calculated as a percentage of the price the property is sold for. The commission is payable following the registration of the home into the new owner’s name.

Seller Costs: Capital Gains Tax

Capital gains tax (CGT) must be paid when a property is sold and the selling price exceeds the original purchase price. The seller is required to pay CGT as part of their income tax. This may not apply if the property being sold is considered to be a primary residence, in which case the seller may not need to pay CGT or a reduced amount of CGT will be applicable. 

Always contact your accountant before selling your home to consider the implications of CGT.

Alan Levy Attorneys – Conveyancing Attorneys in Johannesburg

When selling your home, it is best to be informed and prepared for any expenses that may arise during the transfer process to avoid unnecessary delays. Consulting with experienced conveyancing attorneys for the duration of the process is the best course of action to ensure the timeous completion of your property transfer. 

Speak to our experienced Conveyancing Team. For any enquiries related to your property and transfer process, please contact our conveyancing team at enquiries@alattorneys.co.za

Disclaimer 

This article is designed as a general overview of the costs that a seller in South Africa will be expected to pay when selling a property. This article does not constitute legal advice. Before making any decisions, consult with an experienced attorney. The Conveyancing Team at Alan Levy Attorneys can assist you with the property transfer process.