Amendments of Acts / Rulings effecting Property Transactions

Transfer Duty: Nominee Transactions - March 2003
Minister Trevor Manual mentioned in his budget speech in February 2003 that certain property dealers / owners are making increasing use of nominee purchasers in order to avoid transfer duty or VAT upon re-sale. The dealer / purchaser merely nominates a so-called nominee and when a suitable buyer is found then such buyer is nominated, thereby effectively hiding one taxable transaction. Accordingly, from the 1st of September 2003, these types of artificial transactions will be disallowed by SARS. Section 16 of the Transfer Duty Act, 49 of 1949 now states that any person acting on behalf of a nominee shall immediately upon conclusion of the agreement of sale nominate the nominee. "Immediately" is deemed to mean "the same day". Please be careful when purchasers advise you that they wish to purchase property and wish to have the right to nominate a nominee. Please ensure that, if this type of transaction is concluded, the purchaser nominates a nominee on the same day that the contract is signed to avoid a situation where double transfer duty or VAT is payable.

Amendment Of Sectional Titles Act - March 2004
The Sectional Titles Act has recently been amended. Some of the managing agents are interpreting the amendment to mean that the Seller has to pay all levies which are due up to the financial year end. In effect therefore the Seller has to pay the monthly levies in advance for a period of up to 12 months. The managing agents believe that if they do not do so, they cannot recover the levies from the Purchasers. Unfortunately if the managing agents do enforce the provisions strictly, it means that Sellers will have to pay large sums of money for their levy clearance certificates in order to have the levies paid in advance. We therefore suggest that you include a clause in your sectional title agreements along the following lines:- "In the event that the Seller has to pay levies in respect of a period beyond the date of registration in order to obtain a levy clearance certificate, the parties hereto agree that the purchaser shall refund to the seller any amounts due in respect of the monthly levies after such date of registration on condition that the Body Corporate does not hold the Purchaser liable for payment of such levies."

Cooling Off Period - 25th March 2004
A recent court ruling (Sayers v Kahn (2002) 1 ALL SA 557 [C]) clarified the position regarding whether the clause pertaining to the cooling off period must be included in an offer to purchase/agreement of sale. This ruling clearly states that a sale agreement is void if the purchaser does not enjoy the right to cool off. In practice what this means is, if an agreement of sale is entered into with no cooling off clause or, in our opinion, if the cooling off clause is deleted for any reason whatsoever, then the agreement will be void. This is only applicable to transactions where the purchase price is less than R250 000,00

Clearance Certificates - July 2004
The council has advised that they will only grant clearance certificates in respect of properties for a period of at least five months. Accordingly no clearance certificates are being issued unless the same is for a period of at least five months. This of course has a cost implication for the purchasers and the sellers, but the council is adamant that they cannot change the ruling.

Change in Transfer Duty 1 March 2006
In respect of all transactions signed on or after the 1st of March 2006 the transfer duty in respect of natural persons will be as follows:-
Purchase price Transfer duty payable
R0 R500 000,00 0%
Thereafter from: 5% of the value in excess of R500 000,00 i.e. the transfer duty will be
R500 001 R1 000 000,00 5% of (the purchase price minus R500 000,00)
Thereafter from: 8% of the value in excess of R1 000 000,00 i.e. the transfer duty will
R1 000 0001,00 unlimited be R25 000,00 plus 8% of (the purchase price minus R1 000 000,00).

Amendment of Section 47 of Sectional Titles Act January 2006
A new protection mechanism has come into effect which provides protection for sectional title owners. Prior to the amendment, members of body corporates could be held personally liable for body corporate bad debt. It is however no longer possible to hold members of a body corporate personally liable for body corporate debt on condition that such member has fully paid his contributions to the body corporate i.e. levies etc at the time when the body corporate incurred the debt. This protects members of the body corporate and will add to the security that the sectional title concept as a whole offers to the home buying public in South Africa.

Exemption of transfer duty when taking transfer after divorce - 25 July 2006
From 25 July 2006 a surviving or divorced spouse who acquires the sole ownership in the whole or any portion of the property registered in the name of his/her deceased or divorced spouse where that property or portion is transferred to that surviving or divorced spouse as a result of the death of his/her spouse or dissolution of their marriage is exempt from paying transfer duty.

Change in costs for Cancellation of Bonds 1 August 2006
The Costs in respect of the cancellation of a mortgage bond has increased from R600,00 to R800,00 per cancellation (excluding disbursements).

Copyright © Dykes van Heerden 2005