May 30, 2023
Non-residents purchasing property in South Africa: The Offer to Purchase
In our previous two articles we covered what non-residents need to know about Exchange Control and tax, and financial assistance and costs. This month we cover some information on the Offer to Purchase.
Foreigners are referred to as non-residents, whether they be natural persons or legal entities whose normal place of residence, domicile or registration is outside the common monetary area of South Africa.
South Africa follows a system of land registration, where every piece of land is reflected on a diagram and ownership recorded in one of the regionally located Deeds Registries where documents are available for public viewing. Property can be owned individually, jointly in undivided shares or by an entity such as a company, close corporation or trust or a similar entity registered outside South Africa.
There are certain procedures and requirements which must be complied with and this article provides some insight into the Offer to Purchase for foreigners purchasing property in South Africa.
Purchasing information for foreign buyers
Property of any kind in South Africa is usually purchased through a Real Estate agent who should be a registered member of the Estate Agencies Board.
In South Africa, all contracts to purchase property must be in writing; must contain certain set information; and must be signed by both the buyer and seller of the property for the contract to be legally binding. These contracts usually take the form of an Offer to Purchase or an Agreement of Sale and contains all the important details such as the purchase price, payment terms, inspection and disclosure requirements, and other conditions of the sale. Once this has been signed by both parties it is a valid binding document from which neither party can withdraw without incurring legal consequences.
When selling property, the following costs apply:
– estate agent’s commission,
– clearance certificates (beetle inspection, electrical, gas and electric fence),
– bond cancellation fees (if applicable),
– rates and taxes up to date of registration.
The offer to purchase will contain certain of the following standard provisions:
A deposit is not compulsory, but it serves as a gesture of good faith and indicates financial competence. Provision will be made in the agreement for a guarantee to be called for in respect of the balance of the purchase price. In general, a guarantee will only be acceptable if issued by a local financial institution which means that the funds will have to be remitted to South Africa in order for a local bank to issue such a guarantee.
The property owner is required by law to be in possession of a valid Electrical Compliance Certificate certifying that the electrical installation at the property meets certain statutory requirements. The beetle free certificate certifies that all accessible parts of the property are free of infestation by certain defined beetle. Gas, electric fence and plumbing certificates may also be required.
Fixtures and fittings
A property is sold with all fixtures and fittings of a permanent nature situated thereat. Generally, fixtures and fittings include anything with is attached to the property or which by virtue of its considerable mass accedes to the property. In the event of any uncertainty, the purchaser is cautioned to ensure that all items intended to be included in the purchase price are specified in writing in the agreement of sale.
Whether you’re thinking of buying your dream home in South Africa or abroad, or simply need to make a foreign currency transfer, Currency Partners gives you access to the best pricing and service available in the market so you can make significant savings and enjoy the experience.
To speak to an expert in our specialist team, email firstname.lastname@example.org or call us on +27 21 203 0081.
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