The sale or purchase of immovable property such as houses usually comes with a circulation of big amount of money. Accordingly, every risk that may arise in the transfer process should be avoided. At face value the transfer process looks straightforward and to be one that can be concluded within a short period of time. In practice the processes and procedures involved can be a daunting task for those who are not familiar with the property world or legal terminology. This article aims to give insights on what to consider so that headaches or frustrations are avoided or minimized when buying or selling property in Zimbabwe.
First, it is important to know the status of the property one wants to buy. Is it under an agreement of sale or it has title deeds? Under the former, the property will be transferred to the buyer by cession since the seller at that stage only enjoys personal rights to the property and is yet to be the “owner”.
A cession is a legal act of transfer. It encompasses an agreement which provides that the transferor or cedent transfers a right to the transferee or cessionary. In other words, the new buyer will take over from the person who currently has rights to the property and he or she will inherit the process of working towards being the owner. On the other hand, a person with the title deeds is the owner of the property.
Second, it is wise for a seller to engage the services of an estate agent from the onset and to check with the Estate Agents Council of Zimbabwe that the agent is registered.
The expertise of an estate agent on property transfers would expedite the process, save the seller time by leaving it to the agent to arrange property viewings, and negotiate favorable terms for the seller throughout the transfer process. Should the seller decide to sell the property privately, he or she can save up to 5% on Estate Agents Commission.
Third, even when the owner shows you the original title, it remains your responsibility as a buyer to verify their authenticity with the Deeds Registry Office. Your lawyer may help with the deeds search should you need help in that regard. A deed search will detect details about the property and will show for example that the property is still under mortgage. Further, carefully study the agreement of sale when the property is under that status and check with the person or institution who will process the cession such the city or town council.
Fourth, there is a need to draft a new agreement of parties to reflect the new parties, purchase price, terms of payment and contract, and date of occupation. The agreement should be in writing and signed by both the seller and buyer for it to be valid and binding.
Fifth, where the property has a title deed, the change of ownership is done through the Deeds Registry Office by a conveyancer. A conveyancer is usually appointed by the seller. Conveyancing refers to the process by which the buyer assumes ownership after the completion of transfer.
The buyer usually pays conveyancing fees and the stamp duty. The seller also pays the capital gains tax. A capital gain (or loss) is the difference between the base cost of an asset and net selling price upon the disposal of the property. In other words, this is a tax on the profit when one sells an asset that has increased in value.
The conveyancer peruses the agreement of sale and makes note of all requirements and special arrangements to be made prior to the registration of the immovable property. It is the conveyancer’s duty to obtain the required documentation from the seller and the buyer. The documentation includes their identity documents, and the original title deed. Without these documents the conveyancer is unable to draw up the transfer documents such as the power of attorney, the seller’s declaration and the buyer’s declaration. Once the documents are drawn, both the seller and purchaser will sign the documents in the presence of the conveyancer.
The conveyancer also helps by applying for a rates clearance certificate from the council for an amount to be charged by that council. Where a sectional title unit is being sold the conveyancer will request levy clearance figures from the Body Corporate. In both instances, the council normally asks for payment of any arrear rates plus payment of three months in advance to ensure that no moneys are outstanding at the date of registration. The Deeds Office will only register a transfer if the rates or levy clearance certificate is valid. The seller is responsible for the payment of the rates and taxes in advance.
Lastly, financial institutions such as banks may offer house loans and the buyer may consider buying the house through a bond. Following assessment on whether the buyer qualifies for the bond, the bank may grant the buyer the financial assistance if he or she qualifies. Failure by the buyer to pay bond repayments entitles the financial institution to sell the property to recover the money lent to the buyer.
In conclusion, the process of transfer is as follows: agreement of sale (contract of sale), preparation of transfer documents, obtaining a rates clearance certificate/levy clearance certificate, payment of capital gains tax, lodging transfer documents, registration of transfer, and payment of full amount to the seller (money usually kept in a Trust by lawyers before the payment of full proceeds).