 Good evening and welcome to episode 328 of the Private Property Podcast. I'm your host, Uzaman Douma, Kumalo. It's a Friday edition of the Private Property Podcast, and if you join us for the first time, welcome to the family. You're tuned into the early daily property podcast in the country. We're certainly happy to have you with us. Grab a chair. You're going to see that this is quite a great family to be a part of, especially if you're watching us on our Facebook page. And all our regular viewers at home, welcome back. You know how we do every single weekday. You and I have an appointment at 7 p.m. We always tackle a hot property topic and have an expert guest who helps us make better property decisions. And talking of expert guests and making better property decisions, of course, you can look forward to other great shows across private properties, social media pages, and every weekday at 8 p.m. As it is a Friday, you can catch Chad on the home shopper's show, where he always gives us a great view and certainly a great tour of incredible properties that you can find on www.privateproperty.co.za. And you can also catch him every Monday at the same time. And on Tuesdays and Thursdays, a watering farmer takes us through all things agriculture. So if you've got green fingers and you just want to get a better sense of some of the do's and don'ts and how to best navigate your agriculture goals, then that is the show you want to tune into. And every Wednesdays, Estie Carson takes us through the first time home buyers show, which is always in conversation with people who've not only bought their first property, but have gone on to grow their portfolios from strength to strength. Those are the great shows that you look forward to every single evening at 8 p.m. So do make sure that you set your alarms. And talking about searching your alarms, one of the great things that we're currently doing is running a great competition on our Facebook page and on Twitter. You would have seen the daily competition on Twitter. It's very hot. I'm absolutely loving the different responses that people share when they try to guess who the person that is being posted. But on our Facebook page, we set out a big ambition of wanting to reach the 1 million follower mark, which you, of course, at home helped us reach it. And we also wanted to make sure that the competition post that is pinned to our Facebook page reaches 10,000 likes and 10,000 comments. And we haven't hit that target yet. So do get entering. And you stand a chance of walking away with 500 grand cash. Should you be chosen as the lucky winner? And the earlier way you can catch that money or get that money is if you watch us live and claim the money if we call your name. So you can look forward to that a little bit later on with the show for us to get a sense of who is walking away with that money. And the money bag right now sitting at 2,500 grand because unfortunately, we haven't had somebody claim their prize. So we're going to see if somebody's going to claim their prize or not. Of course, I want to see all the love on social media, especially those who are watching us on Facebook. I already see Umo, Umo, and they're saying hello, Zama, and Nelda, Everton. I see you as well as Bonzo, Bonzo and Jinye. I also see you. That's of course all the love that we're getting on our Facebook page. Well, this evening, we're going to be tackling a topic that I know many of us always need to have a good understanding of because it is one of those topics that sometimes actually still dribbles me. You would have thought after doing this so long, I would have a sense of how to do it, but I still get dribbled. And that's why it's so important for us to have a really good understanding of it as much as possible. And that is of course the conveyance and process when looking at our property portfolio and navigating our property portfolio. And help us get a good sense of this. I'm joined by Marika Elka, who is an associate ex-name and attorneys. Marika, good evening and thank you so much for joining us. Zama, thank you so much for having me. It's a pleasure and an honor. You know, Marika, I think this is one of those topics that you and I can probably spend over three hours having a chat about. The viewers at home know that I am one of the courses that I take is actually property law. So it's law for property development and management. So now I even have really cool questions I can ask when it comes to law. That's why unfortunately I am not live on air on Thursdays and we always have somebody who holds down the fort. But for those who are not studying it, because you certainly don't need to study this, right? You just have to have a really basic understanding and be able to best navigate your way around it. I think when we look at, you know, when you're buying a property, what are some of the things that we need to be taking into account when buying, especially from, you know, the signature of the offer to purchase? Because I think people are still not quite understanding just the gravitas of the, you know, offer to purchase and that it's a legally binding document. It's not a, oh no, man, it's, you know, things are not confirmed yet. Like you've now entered into a legal agreement. I think first you say, because through what to take into account when it comes to, you know, when you're buying a property, is it when it comes to an offer to purchase? Yes, I'm 100% right. We get a lot of questions these days. People telling us, listen, I've only signed an offer. It's not a sale agreement, but that's 100% right. The moment you put your signature on an offer to purchase, it becomes a valid and binding document. Whether it's subject to a suspensive condition, that would normally come in with your negotiations. So there are certain pitfalls regarding offers to purchase. For example, whenever you do put in an offer, you would make it according to a time limit. For example, your seller has until Thursday the 1st of September to accept your offer. If he does not accept your offer before or on Thursday, the 1st of September, then that offer would lapse and it would be null and void. At the moment that he accepts that offer, it becomes a final agreement. Not saying that it wasn't final beforehand, but there were certain suspensive conditions that it was made subject to. The moment he accepts it, that agreement begins and is put into place, subject to certain conditions being fulfilled and that we call your suspensive conditions. For example, your purchaser needs to obtain a bond or your purchaser needs to sell their property. And you know, Marika, we'll look a little bit at the suspensive conditions because I think it's still one of those things that people either firstly just don't understand or some of the clauses that could be beneficial for them, that you can easily sort of safeguard them as much as possible if they're still uncertain about certain aspects of, I'll say, their home loan application journey because so many things can happen. I think before we get to that though, then when we look at some of the do's and don'ts, if we just wrap up, especially for people who are buying, I know a lot of people right now at home are looking at, you know, taking advantage of low interest rates and exploring buy-in with many we're seeing that their first time home buyers, so they haven't walked this path just yet. I think what would be some of the key things that you would say as a buyer, especially a first-time home buyer, be aware of this before entering, before signing that offer to purchase? So the most important thing that we cannot stress enough is be aware that the loan that you're applying for does not include your transaction costs. So the cost would have to be paid separate from the purchase and Zoma, you won't believe it, we really get this a lot and that will delay a transfer to quite an extent if your purchaser does not have the money available to pay the transfer and the bond registration cost. It's two separate fees that need to be paid and normally they are more or less the same amount. The purchaser would just pay a higher amount to the transferring attorney who does the registration of the transfer as they would normally have to pay SARAs and municipal application fees and so forth. But the important thing to take notice of that your loan amount will not include your costs. Marge, that one is an issue that I always share whenever we talk about this and I know a lot of the regular viewers have heard me say this so many times that not knowing the costs associated, the legal costs associated with home ownership, I think is one of those things that so many of us when we're buying a home for the first time tend to not know. I always share how it also happens to me and I was one of those first-time home buyers who had done quite a bit of research for a few years, sort of on and off but obviously back then there just weren't as much there wasn't as much information. There certainly wasn't the private property podcast that's able to break down these things for us and when I bought I was buying and well fortunately unfortunately I guess it depends how well it looks at it was buying two properties at a go and as far as my research and my budget were concerned I only thought there was one attorney per property and these were not properties that were being bought cash because if they were then that would be the case these were being financed and so when the first two invoices came I knew to expect them and by the time the third one and then the fourth one hit my inbox I thought okay maybe somebody stole my identity there's something happening I'm not understanding and it was only until one of the attorneys called me because obviously I haven't made this payment I'm not even responding to their emails because I was confused what is happening that they actually explained no so this is what happens when you're buying a bonded property you're going to pay for your bond registration attorneys and you're also going to pay for the transferring attorneys so you're not being scammed you know we are the attorneys that are handling this matter and this property and whatnot so it's one of those things that you absolutely absolutely need to make sure you are aware of especially as a first-time home buyer because the invoices can be quite substantial you know when you haven't budgeted for it it can be quite a big invoice but we're seeing a lot of the questions and comments on our social media platforms Vanessa now absolutely see you and loving those hard Salani play saying hello Mariki welcome Chanel for me as well and we've got semi my shots are saying offer to purchase is a binding document people needs to not just run to sign up immediately after viewing the property and that's such a big one don't be forced into you know signing an offer to purchase I know sometimes estate agents can make it seem as though just sign you know you can get out of it don't do it and Chanel for us saying you should ask beforehand what is the costs involved and that's quite a big one right so really understanding the different costs that are involved in this we're going to go for a very quick break and we're going to find out who the potential winner of that 2500 rands that is in the money bag is I hope you're watching whoever's going to you know be a winner hope you're watching so you can end off so we can end off the Friday with giving away the money and you can have a really great weekend knowing that you're you're 2500 rands richer so let's see who the potential lucky winner is of the 2500 rands and the winner is Uko Sorkhumelo if you are watching make sure that you drop us a text down here below to claim that 2500 rands otherwise it's going to roll over to Monday it's going to be 3000 rands if it rolls over if it rolls over so Uko Sorkhumelo do make sure that you reach out to us to claim your primes now I am this evening of course in conversation with Marika Henler who's an associate at Snaiman attorneys and we're looking at the convincing process which is something that we really need to be aware of as people who are interested in property whether you're going to just buy your primary residence or by going to buy your investment properties now Marika one of the things that you mentioned earlier on was of course around the suspense of um clause I think let's look at then you know fulfilling that suspense of condition because one of the things that happens is that you know I would say a relatively generic suspense of course for people put in is you know obviously getting their home financing and not going to the extent of saying that they must be satisfied with it or it must be a hundred percent for example which helps you um quite a bit I think explain that for our viewers because it it does help when you are very explicit because if you just said you know you you must have confirmation of sort of bond finance and your bank comes and gives you an 80 percent you know bond finance you would have essentially met that criteria and you would be expected to raise that 20 percent so how do we make sure that we're able to fulfill our suspensive conditions that comes in when you are negotiating your offer to purchase and in some instances people do pre-qualification so they do know what more or less they will be able to qualify for but that's not in all instances so in most instances people do try for a hundred percent bond and that's exactly what they would include on the offer to purchase for example let's make your purchase price a million right they would say the offer is subject to them obtaining a bond to the amount of one million one million right and then if they do not get that obviously your agreement with laps but halfway through maybe let's say they do obtain an 80 percent bond or a 90 percent bond in that instance there it is possible for the conveyance to draw up an addendum normally or estate agent would also help with that and both parties would then sign an addendum to the agreement to say that the purchaser has accepted the lower bond amount and they waive the condition to obtain a hundred percent bond they have to pay the deposit and the transfer of the receipt that's exactly also showing why this agreement is for the protection of the purchaser if they do then get a bond granted for less than the amount that stipulated in the offer to purchase they can back away and say sorry I did not get the hundred percent bond you cannot hold me liable in terms of this agreement but in other cases they can sign the addendum and they can proceed and one of the things Merica that you know you're mentioning just now is how often more often than not for the protection of the purchaser making sure that you know add in that hundred percent I know some even add in the interest rate that they would be comfortable with so they'd say you know either let's say for example at max a prime plus 0.5 so if any of the banks you know give them prime plus let's say 0.75 then the you know the OTP would lapse because they didn't get a rate that they were comfortable with and they probably you know would have tried to negotiate and unfortunately weren't able to be successful what are some of the clauses Merica that you found a lot of sellers want to be included as much as possible to make sure that the the I'll say the the deal goes through or that they themselves are able to essentially offload this particular property because I want to look at both sides so the one where sellers are like okay this is a creative suspense of clause I can add and then we'll touch on ones that you know as a purchaser it would be in your best interest if you consider adding some of them so it close definitely to the benefit of of the seller would be your 72 hour clause some call it your backdoor clause some call it your continued marketing clause so let's say for example there is a suspense of condition in the OTP that your purchaser needs to sell their property obviously they are granted then an extended period to see whether they can sell their property let's say two months that would be longer than your normal suspensive condition where they just have to claim a bond then your seller would have to make sure that they do reserve the right for themselves to continue marketing the property in for example an instance where they do get a second offer in where that offer is unconditional or the conditions are already met then they can place or notify the current purchaser to say that I do have a second offer in line you have the amount that the time period agreed upon which would normally be three days or 72 hours to provide us with your offer to purchase your property which would make the suspense of condition fulfilled otherwise the seller will then have reserved the right to cancel the current sale agreement and proceed with the second purchase that's one of the base conditions for your seller to have in if there are suspensive conditions especially suspensive conditions which would run over an extended period of time and and then Erica when we then look at the you know the purchaser side and we've already touched on you know on one around you know how much bond finance you're able to secure and we're even able to go to adding the interest rate that you'd be comfortable with I think what are some really great suspensive clauses that a purchaser can potentially look at including to also just best protect them when they sign an offer to purchase so your two basic suspensive conditions that you would find are for example your loan agreement and selling selling of a property but let's say for example we look at a deceased the seized sale obviously they would have to be a a suspensive condition in that the master approves the sale but let's not just look at suspensive conditions normal conditions that your purchaser would want in there a specific one would be fixtures and fittings which they normally always overlook we've had earlier recently where the seller actually removed the gas stove because it was not in the fixtures and fittings so purchasers whenever you do sign an ITP make sure that you do go over the fixtures and fittings make sure what the seller will remove and what will be what will stay at the property when when you do get it you know Madika when you talk about the the fixtures they're actually reminding me we were literally doing this in our law class last week but we're even looking at it from a commercial property perspective which is a very different dynamic all together when it's you know commercial and industrial property and and I want to take in a few of the comments and questions from our viewers at home we've got Umunzhan is saying yes I must say that again I'm going into property with a lot of knowledge private property has shared with me and then Umunzibuteli is saying buying two properties at a go to Shea I dragged the process to the deadlines so I could make the fourth 20k then I paid it all so much leaving so much money leaving my accounts gave me a mild chest pains look Menzi I know your pain I absolutely know that pain especially when you're only budgeted for half the amount because usually when it transfer costs let's say they work out to be about 50k for two properties uh you know you've got it saved up it may have taken you substantial amount of time then learning that you actually needed to have saved up for 100,000 rents certainly does leave you with quite a lot of chest pains I you know Merica I think I want just then to to look at because I think one of the great things is we have a really good sense of as a purchaser as well as the seller what we can certainly put in place to best protect each other because I think one of the great things with properties that you really do want to not screw anybody over and the other side also doesn't want to feel like they've been screwed over right so you really do need to be able to meet each other halfway as much as possible when we then look at people who unfortunately have signed an offer to purchase and we're not aware that this is a legally binding document that you are going to be held to what then happens if somebody and let's say it's so relatively early on in the transaction wants to pull out and and I say this particular reference to they didn't they had only said let's say Suspensive Closes at Bond Finance is secured they hadn't said you know to 100% so they do get you know different banks offering them an amount but it's not 100% that said most it's 90% and so the Suspensive Closes has been met on the one hand but they of course are feeling bad I don't have that 10% to raise what then happens in situations like that and how will that impact particularly the purchaser and the costs that may be associated if they're adamant that listen I'm pulling out I'm not going ahead with this at all yeah so my actually we had a matter like this about two months ago where the purchaser obviously she she says she wasn't aware of all the costs that they had to be paid associated with a transfer and a bond registration she fulfilled the Suspensive Conditions and by the time we started claiming the transfer costs she literally let us know but I do not have any other finances or means of obtaining the finance to pay the transfer and the bond registration costs which were quite extensive and she then opted to cancel the agreement unfortunately this will mean breaching the terms of the agreement as the agreement will most probably or most definitely state that the purchaser needs to pay the transfer costs in that instance we had the seller first placed her on terms which was seven days she were given a week to perform and and still she were adamant that she did not have the transfer costs or the means to get the transfer costs or the bond costs as well after that the seller then elected to cancel the agreement she was really aware of this this so she at the end of the day had to pay the state agents commission as damages and also the transfer costs up to the stage where we were by then so there's a sliding scale of transfer costs to be paid it depends on how far in the transaction the conveyance has gone for example let's say you reach up until the stage where the conveyance has applied for clearance figures has submitted all the documents to SARS that would be more or less a 40% of the transfer fees that had to be paid to the conveyances there were instances which we had where the transfer was cancelled up until the last moment right before enlargement for example when the purchaser said that they did not wish to continue with the sale for reason private reasons for example and they did not have the finances or their circumstances changed still it amounts to a breach of agreement and there are damage viable for example like I said the state agents commission transfer costs and bond costs as well and I think it's just such an important thing to note that you know pulling out at such an advanced stage I mean the moment it reaches your registration it's so late I mean obviously it's still hasn't been registered so you know in principle you can pull it out but you don't want to get to that stage in a in a matter and pulling out at that time that's why I always emphasize that when you're going to buy property you must have done your due diligence you must be certain rather take more time trying to choose a place than less time go and see the place the second the third and the fourth time if you need to because once the you know you've signed the offer to purchase and the bowl gets rolling there's so many different implications that you you need to certainly be aware of America before I let you go you know what are some of the you know differences what comes to the transfer processes and some of the provinces before registration that our viewers at home should be aware of so there's one province I want to talk about and that's the province of our practice in Puma Langa so I I do think that most purchases and sellers are not aware whenever you do a transfer in Puma Langa any any town in Puma Langa, Whitbank, Middleburg, Nile Sprite it's subject to a Spruma certificate being launched together with the transfer and this will indefinitely it will definitely delay the transfer as a Spruma certificate can take up to 21 working days and even more in some instances where it is found that there are some discrepancies that the municipality aren't happy with and so we've actually had quite a few instances where sellers have property in Puma Langa I don't know whether you know we have the famous Mall of Park here where they do own the properties and they weren't aware that a Spruma certificate needs to be obtained and then obviously the conveyances are blamed for a delay in transfer but like I said there are certain requirements that are provincially bound for example when you buy coastal areas then your beetle certificates come in as well but the most important one that I want to emphasize is the Puma Langa one where a Spruma certificate needs to be launched with every transfer and Marika you've done the thing that attorneys do where they assume we all know what they're talking about when we talk of the Spruma certificate what is it because I know viewers at home are probably wondering okay this is the first that I'm hearing of it uh chances are you know people in Puma Langa who brought property they know but we're in Khao Deng we're in North and Cape we're in all these other provinces where we have been encountered it what is the certificate so initially it was thought that the Spruma certificate only relates to building plans yeah it does to some extent relate to building plans it also relates the municipality wants to check whether all services on the property has been activated and paid if I can put that in simple terms and also whether there are any encroachment onto another urban and and that's the crux of it the municipality does due diligence on each and every property before they will issue the Spruma certificate specifically regarding zoning building plans encroachments on to other properties and the municipal services there are few phases which it has to go through for example the electricity department the the storm water department and for for example that needs to have the approval before the certificate will be issued you know in in in in principle I I like you know the Spruma certificate and the intention behind it and would even want a similar case to be extended across property you know transfers unfortunately we also know the slow paced nature of our municipalities and how it doesn't become a smooth and seamless process because in principle we know why that should be important and why we probably wanted across our different you know properties because if you are buying your property you'd want to know that everything not just from the legal perspective but literally the services are well-running and even the municipalities like no we know we're giving you water and electricity and we've certified that yes these these are services are running in your property now miracle before I let you go this evening I can see unfortunately all from Ocosa Ocosa has not picked up their hand it seems like we're going to have a roll over they still have a few minutes before we wrap up our conversation but before I let you go any final tips for our viewers at home when it comes to you know the conveying process especially the first time home buyers I think I almost want to also add people who are going to be buying their second properties and they want to sell the first property you know what tip can you get in structuring the OTP of where they want to buy because some of them say that it's subject to this property being sold first and you want to make sure it does get sold you're not left you know qualified for this and you now have two bond payments that you're making out so how can they also best navigate that that's 100% right so I actually stated to yourself whenever you are selling your property and buying another property make 100% sure that you do make that offer to purchase subject to the sale of a successful sale and transfer of your property but only for the reason that you won't have somewhere to live if you sell your property if you obviously when you sell your property and you buy another property and the first sale doesn't go through and your deposit for the second purchase would obviously come from the sale of your property so that's for financing reasons as well and another aspect I want to just touch on that we found that sellers do not normally know when they sell their property is that if you have obtained a bond over the property which you've purchased 10 years ago which you are now selling that that bond still needs to be cancelled even though it is paid up and to effect cancellation is a deeds office process on its own there will be a cancellation attorney appointed by the bank and you will have to pay bond cancellation fees and most sellers that we do talk about say that I've paid to have the bond registered why should I have paid to have it cancelled unfortunately that's the bank you have to pay to your bond cancelled even though it is paid up yeah I think that that's probably a question to ask to the bankers that we've had it open we paid for it and most people don't pay upfront so they've effectively you know paid for it over the loan term where if the the amount to say 5000 you get added on and when you look at the interest just of that 5000 component it will drive you crazy I've done the maths it drives me insane every time I think about it and that's why for a primary residence you almost want to have the money upfront so you pay for it like just pay for it don't have it be added to your facility because once you become that random saints person it it will drive you in like interest of 5000 over your 20-year loan term it's a lot so just make sure that you at least have your bases covered in that regard oh Marike that's we're gonna leave it this evening thank you so much for joining us it's always such a pleasure to have you on thank you so much Zomai it's a pleasure being here and just also seeing you and seeing just being part of the show is really amazing you educate people to the next level which is really necessary no thank you very much Marike and that is Marike Eglia who's an associate at Sneyman Attorneys and that wraps up the Friday edition of the Private Property Podcast with myself Uzaman Tungwa Khumalo and fortunately Uzaman Tungwa Khumalo did not claim their money so it is rolling over into the money back so on Monday we're going to be able to give away 3000 rands remember if you know you've entered watch this live watch live if you call your name comment and that's all you need to do in order to walk away with that money well I'm off I do hope that you're going to enjoy your evening of course you can catch the home shoppers show later on at 8 p.m with Chad I'll be back on your screens on Monday evening at 7 p.m until then hope you're staying home and staying safe