Advice for property buyers, when considering transfer of property.

1. Transfer of Property<br />1. SIMPLE TRANSFERWhen a seller concludes an agreement of sale for his property, he should be in possession of the Deed for the property which will be in his name. The current Deed in the seller's name and the Agreement will go to the conveyancers who will then be able to draft a new Deed in the name of the purchaser along with other documents required by the Deeds Offices to effect transfer, such as declarations for Stamp Duty purposes by both parties and a Power of Attorney by the seller authorising the conveyancer to deal with the transfer.The draft Deeds are signed by the attending conveyancer, the declarations are signed and witnessed by the respective parties and the Power of Attorney is signed by the conveyancer and the seller and witnessed.A Rates Clearance Certificate has to be acquired from the local authority for a period of six months during which transfer is likely to occur. To obtain the certificate an estimated rates fee for the six month period will have to be paid. This fee is usually paid by the Purchaser as the Seller is required to pay 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 the documents 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 well in advance. He will accept the fee but can not, generally, pay it until transfer has been registered. His only option is to hurry up and get your transfer registered. As from the February 2009 5% Capital Gains Withholding Tax is required to be paid by the Seller prior to the conveyancer lodging the deeds at the Deeds Office, If the Seller is over 55 years of age he is able to apply for a tax exemption providing it is the Seller's principal private residence.Any property purchased after dollarisation is liable for 20% Capital Gains Tax on the GAIN.As the sellers representative, the conveyancer is also responsible for making sure that the entire purchase price is secured to the sellers satisfaction, be it cash in the lawyer's trust account, guarantees from building societies or written confirmation from the seller that he has received all of the purchase price. 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 a cheque 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, they will be returned to the conveyancer with a query, for correction and relodge. If the documents are to the pleasure of the Registrar of Deeds, the required amendments are made in their land register and records, i.e.: the sellers Title Deed is cancelled and the purchaser's Deed is registered. The Registrar of Deeds will sign the draft Deeds (in the name of the purchaser) and date them. One copy is retained in the Deeds Office with the Declarations, Power of Attorney and Rates Certificate, the other is returned to the conveyancer.Nothing brightens a conveyancers day as does a registration because he can now claim his fee and to be honest, its really the only good news he can give the parties during the entire transfer process. From the date placed by the Registrar of Deeds on the new Deed, the seller is no longer owner of the property and becomes entitled to the purchase price and the purchaser becomes the new legal owner of the property. The conveyancer will release the purchase price to the seller if he has it in his trust account, or will request payment in terms of a guarantee from a building society when a bond is involved. 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, the other 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 necessarily want to sell the entire property. Instead he may only wish to sell a portion of it. To sell that portion of his 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 that diagram deed is required so that the surveyor general can do the necessary deduction of the sold portion 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 do a diagram of the proposed sub-division. The sub-division must be within the limits set for the area by the local council. This diagram is attached to completed application forms and submitted to the director of works for his approval and for a permit to be granted. If approved, the permit will allocate the sub-divided portion a unique stand number and set conditions and requirements for the proposed sub-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 his approval. Once approved he will release the diagrams duly signed as authorised, to the surveyor. This process normally takes in excess of 6 months. The approved diagrams are then incorporated in the title deeds which are prepared by the legal practitioners. We thus have the sub-divided portion's first title deed and diagram. Once the approved diagrams are received by the legal practitioners, the normal process of transfer is undertaken by the conveyancers as previously discussed. In a normal transfer the deeds 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 has registered the transfer. The purpose of this is to allow the Surveyor General to do the necessary deductions and amendments to his diagrams. This normally adds another 6 months to the registration process.From this it's clear that the process is a lengthy one. From a purchaser's point of view, it may take years 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 the seller has a permit for the sub-division from the director of works and approved diagrams from the Surveyor General.As far as the seller is concerned, a good dose of patience is a necessity. From the time you decide to sub-divide and sell to the time you receive any money may be ages, as most purchasers will only release funds once transfer has gone through. The best approach is to get the permit and approved diagrams 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 the purchase price is deducted a endowment tax which is specified in the sub-divisional permit. The seller is also responsible for paying the surveyor and fees for the permit and other applications. The endowment 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 adjacent land. The purpose of this is normally so that the owner can build across the former dividing line between 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 of any building within the confines of that land. This principle holds fast in respect of houses and most properties in general. Problems do however arise in situations such as private ownership of flats and highrised 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 an exclusive 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 the administration and maintenance of the property. Each owner of undivided shares is bound by the notorial 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 people own the other flats/offices. The owner gets a title deed and it is possible to raise a bond against the purchase 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 come up with the purchase price but also has to pay the stamp duty and fees for the registration of the transfer. This accounts for 6%-8% of the purchase price.The method of share transfer overcomes these costs. Share transfer arises where the property is owned by a company as it's 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 purchasers. The process of share transfer can be undertaken in an afternoon as opposed to the lengthy delay 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 of the company, of which he is the shareholder. He then has to take on the responsibility of running that company and keeping the necessary records and registers. But there is nothing preventing the purchaser from later transferring the property into his personal name, when he can afford the cost of transfer, and rendering the company defunct.From the purchaser's point of view, it's important to ensure that the company in which he is about to acquire shares, has no other assets or, especially, liabilities. It will be a good idea to get an accountant to check the company's records and accounts. The cost of the accountant is justified by the risk of buying an unstable company.<br />