When purchasing a house or a building there are legal procedures that must be followed. If those procedures are not followed it becomes illegal and it will cause many problems in the future. There are things that are needed for the legal process to be successful,these include a contract of sale, rates clearance certificate, levy clearance certificate, the process of transferring documents and capital gains tax
A agreement of Sale must be prepared which constitutes the terms and conditions of sale of a property by the seller to the buyer. These terms and conditions include the amount at which it is to be sold and the future date of full payment. This must be signed by both the seller and the purchaser to constitute a valid and binding agreement. It is advisable for both parties to get a legal opinion on the Sale Agreement before signing same. The signed contract is forwarded to the conveyancer who peruses the contract and makes note of all requirements and special arrangements to be made prior to the registration of the immovable property.
The conveyancer requests the required documentation from the seller and the purchaser, for example, their identity documents, the original Title Deed etc. Once these documents have been received the conveyancer can then draw up the transfer documents such as the Power of Attorney, the Seller’s Declaration and the Purchaser’s Declaration where after the seller and purchaser will sign the documents in the presence of the conveyancer.
The rates clearance certificate is applied by the conveyancer to the municipality in which the property is located and the municipality will advise on the amount payable. The municipality 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 not register a transfer if the rates clearance certificate has expired. The seller is responsible for the payment of the rates and taxes in advance.
There is need of a levy clearance certificate this is similar to obtaining a rates clearance certificate .The levy clearance certificate is obtained from the Body corporate and when sectional title unit is being sold the conveyancer will request levy clearance figures from the Body Corporate. The seller is similarly responsible for the payment of the levies to obtain the certificate.
The Seller has to pay capital gains tax on a property when it is sold. A capital gain refers to profit that results from a sale of a capital asset. The gain is the difference between a higher selling price and a lower purchase price. Thus the seller, unless exempted, is in terms of the Capital Gains Tax Act (Chapter 23:01) required to pay Capital Gains Tax and obtain from the Zimbabwe Revenue Authority (Zimra) a Capital Gains Tax Clearance certificate is part of the documents the Conveyancer lodges with the Deeds Office.
The next stage is lodgement and registration where by the conveyancer is now ready to lodge the transfer documents in the Deeds Registry. Should a new bond be registered over the property or an existing bond be cancelled the documents will be lodged at the Deeds Office simultaneously with the transfer. The documents are examined in the Deeds Office by qualified examiners. The process takes not more than ten working days. When the Deeds Office is satisfied with the accuracy of the documents, the transfer is then registered.
The last stage is paying out of procedures whereby a purchaser has to pay to the seller. A purchaser who agrees to have the entire purchase price released to the Seller before registration of transfer exposes himself to serious risk. It is advisable that the purchase price be held in Trust by the Conveyancer pending transfer. After registration the conveyancer has to ensure that the proceeds are reconciled and paid out correctly. If there was a bond registered over the property the outstanding amount as required by the bondholder is settled in full. The conveyancer pays the commission due to the estate agent (if applicable) and pays out the balance of the proceeds to the seller.
Through the guide above it becomes easier for everyone to know the procedures that must be followed when purchasing a property.