“My wife and I are considering buying a house. This is a big decision for us and we want to make sure we are financially prepared for all the costs and expenses involved in doing so. I understand that in addition to the purchase price there may also be additional attorney costs I would need to factor in. Can you explain how this will work and how I can budget for such costs?”
You are correct. Buying a house is a big decision and does require you to be prepared for all the costs relating to the purchase, including potential attorney fees that may need to be paid.
In practice, the general rule applied (unless the deed of sale deals with it differently) is that the seller chooses the transferring attorney (called a conveyancer) who will transfer the property from the seller into the name of the purchaser. The conveyancer is entitled to charge transferring fees to transfer the property, and again these costs are usually carried by the purchaser.
The fees chargeable by a conveyancer is based on fee guidelines for conveyancers that are annually issued by the Law Society of South Africa (LSSA). These standard guidelines are generally applied by all conveyancers, although conveyancers can by agreement charge more or less than the guidelines. These fees are also based on a sliding scale, with fees chargeable linked to the purchase price or property value, which means that the higher the price or value, the higher the transfer fees will be.
Should you wish to finance a portion of the purchase price through a home loan, another set of costs to be considered are that of the bond attorneys. As financial institutions will require a mortgage bond to be registered over the property, the financial institution will appoint a bond attorney to do this and the bond attorney will also charge the purchaser bond registration costs. These costs are also based on prescribed tariffs.
Lastly, although not for the purchaser’s account (unless the purchaser also has to sell a property), there may be bond cancellation costs. If the seller has an existing bond registered over the property which must be cancelled before the property is sold, the seller will also have to arrange for the cancellation of the bond and this will require the use of bond cancellation attorneys who in turn are entitled to charge the seller bond cancellation fees.
As you can see from the above, one must factor in these costs as well when considering the purchase of a property. If you have a specific property or price category in mind you can approach your attorney to ask for an indicative quote on what the various costs may be. There are also various cost calculators available online that can provide you with an indication of the potential costs based on the prescribed tariffs. These options should give you a good indication of what you should be budgeting for.
And remember… Should you purchase a house, you are entitled to request that any attorney fees be discussed with you beforehand to enable you to assess the costs and clarify any questions you may have regarding the fees that will be charged by any attorney assisting you with your transaction.