South Africa » The Purchase Process

Buying a property is usually the biggest investment that a person undertakes and thus involves a lot of preparation and activity. Buying your own home offers you financial and mental security but, if you are a first-time buyer or have not done so for some time, it can be quite a daunting experience. The following is a general guide to the process of buying a property in South Africa and expectantly it will assist in making this process a lot less stressful for you. Buying property in Cape Town is no different to buying property elsewhere in South Africa.

The steps and procedure for the purchase of property are described below.

If you buy a house, you will own the whole property and you will have to maintain and repair it. You will also be able to use it as security for a loan. If you buy an apartment in a building, what you will own will depend on the type of ownership scheme: if it's a sectional title scheme (i.e. a condominium or strata property), you will own the apartment (and any garage or servant's quarters or storeroom that you buy with it) directly, and you will jointly own the "common property", such as the passages, the elevator and the garden, with the owners of the other apartments you will be able to use your apartment as security for a loan if it's a share block scheme, you will not own the apartment itself, but you will own shares in the company which owns the building, and those shares will give you the right to live in the apartment you will not be able to use your shares as security for a loan. Generally speaking, owning an apartment means less repair and maintenance work than owning a house. 

Generally speaking, there are three ways of paying for a property:

• paying the full price in cash
• paying part of the price in cash and the rest with a loan (usually called   a "bond"); It is advisable to apply to your bank for a pre-approved loan, which will enable you to look for property in the price bracket you know you can afford
• paying the full price with a loan (known as "100% bond").

If you take a loan, you will have to repay it over a period of 20 years (though this is variable). As a general rule, you should not spend more than 30% of your monthly income on the loan repayment.

Once you've decided to buy the property, you must make an offer in writing. If an estate agent is handling the sale, he or she will probably draw up the document for you to sign. By law it must contain the following information.

• your name and address
• the seller's name and address
• the property address or erf number or section number
• the price you are offering to pay
• whether or not you are entitled to a "cooling off" period 

This document is also known as an "Agreement of Sale" or "Deed of Sale" and is an agreement in writing stating the terms and conditions under which you consent to the purchase of the property. This is a legal document and it is very important that you understand all the clauses which it contains. A good agent will explain each clause in detail. Most agents have a standard form, but you can also add clauses of your own if you feel it necessary. If you are still not sure of certain clauses, you can ask your attorney or legal advisor to look it over before you sign. Remember that if you are applying for a bond, the offer must clearly state the amount of the bond and the number of days in which the bond must be approved. All alterations and the bottom of each page must be initialled. Ensure that any blank spaces or lines are crossed out to prevent anything from being added. Make sure that the fixtures and fittings are clearly listed in the offer.

Once you have signed the offer, the estate agent must present it to the seller. If the seller accepts it, you have a binding contract. If you are buying a house or apartment or other residential property in your own name, and the price is 250,000 Rands or less, you will be entitled to a 5-day 'cooling off" period, during which you can reconsider your offer and cancel it if you want to, without being in breach of contract.

Once the seller has accepted your offer, you have bought the property. However, it does not legally become your property until the details of the sale have been registered in the Deeds Office and the official records have been changed to transfer ownership from the seller to you. This usually takes a few months.