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    Saturday, 10 September 2016

    Sale, purchase of immovable property


    Edmore Chigonga is an Estate Agent and Valuer. He writes in his own capacity and can be contacted on 0772 816 089.


    THE SALE or purchase of immovable property can be a difficult task for any layperson be they foreigners or locals especially with the vexing terminology and the various processes and procedures involved.
    THE ESTATE AGENT
    It is prudent for a seller to engage services of a reputable estate agent. Before the engagement of an estate agent, it is important to verify with the Estates Agents Council of Zimbabwe whether such an agent is registered and has a valid Compensation Fund Certificate. An estate agent could be defined as a person or firm of persons who have an excellent understanding of property markets inclusive of knowledge with respect to selling and or letting (managing) of commercial, industrial or residential properties on behalf of individuals or corporates.
    Estate agents negotiate on behalf of the seller with potential purchasers and also market the property, arrange viewings and see to the signing of the Sale Agreement.
    Estate agents are usually available throughout the entire process and assist both sellers and purchasers where need be. The seller will be responsible for the payment of the Estate Agents Commission which unless the parties agree otherwise is 5% of the purchase price of the property.
    DEED SEARCH
    It is important that a deed search be carried out by the purchaser to verify the status of ownership. Before signing of the agreement of sale, it is the responsibility of the purchaser to establish whether the seller is a bonafide seller. One must check with the registrar of deeds at the Deeds Office to verify the registered owner of the property and to check on whether the property has any caveats that are attached to it. My advise would be that the purchaser engages the services of a legal practitioner to do these checks and if satisfied then one can proceed. 
    TRANSFERRING ATTORNEY/CONVEYANCER
    Conveyancing is a process of transferring legal title of property from one person to another. The conveyancer attends to the transfer of the property from the seller to the purchaser and ensures that there is compliance with the terms and conditions of the Sale Agreement. The purchaser is responsible for the payment of the costs relating to the transfer of the property such as Conveyancing fees plus stamp duty.
    BOND CANCELLATION
    Should the Seller owe money to a financial institution in respect of the bond, due to the borrowing of monies to procure same, then the seller has to request the bond holder to issue a cancellation instruction to an attorney. The cancellation attorney must obtain the original title deed to the property from the bond holder who will be holding same as security. The bond cancellation attorney then attends to the cancellation of the bond simultaneously with the registration of the transfer and the new bond, if applicable. The seller is responsible for the payment of the cancellation attorney's costs.

    THE CONTRACT OF SALE
    The sale of immovable property has to be reduced to writing in the form of an Agreement of Sale and 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.
    LOCAL AUTHORITY CLEARANCE/ Rates Clearance Certificate
    The conveyancer applies for a rates clearance certificate from the relevant municipality which 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.
    ZIMBABWE REVENUE AUTHORITY CLEARANCE/Capital Gains Tax Clearance Certificate
    Sellers have to pay capital gains tax on a property when it is sold. 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 it is a tax levied on the capital gain that arises from the disposal of an immovable property. 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 which certificate is part of the documents the Conveyancer lodges with the Deeds Office.
    PAYMENT OF PROCEEDS TO THE SELLER
    A Purchaser who agrees to have the entire or a portion of the 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.
    In conclusion, I strongly recommend that due diligence be done before conclusion of the transaction by both parties to avoid any financial loss or disappointments.
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