Do you know the legal pitfalls?
It's surprising how many home buyers don't know the legal implications that surround property transactions. But beware: there are pitfalls, and once you've signed the contract, there's not much you can do to get out.

According to Lanice Steward, MD of Anne Porter Knight Frank, the contract is completely binding once it has been signed.

"Some buyers have the idea that after further thought and discussion (and, possibly, more home viewing), they can change their minds, possibly by means of the 'cooling off' clause. However, this escape route from a contract applies only to properties with a value under R250 000," she says.

Verbal offer illegal

Contracts, adds Steward, are only legally binding if they are in writing.

"It is actually illegal to make only a verbal offer but apart from that, the buyers should realise that the offer stands a far better chance of being accepted if it is in writing."

A second tip is that you must exercise your right to carry out a total inspection "from the cellar to the dome" if you're considering buying a house. You should insist on checking all areas but if a professional valuer or inspector is employed for this purpose, his or her work is for your account as the buyer.

Moreover, you must check that all plans, including any alterations and extras carried out, have been approved by Council. Contract documents usually ask the seller to guarantee this but if he has done so falsely or in ignorance of the true state of affairs, you will face a huge problem if and when any further changes are required.

Pay your taxes

Your relationship and that of the sellers' with the Receiver of Revenue is also key. If you're buying a house, says Steward, you must realise that before a transfer goes through, the Receiver of Revenue will receive a copy from the conveyancing attorney and will check if your taxes, particularly income tax, are paid up.

If money is owing, the Receiver will insist that this is paid before transfer is authorised.

"We have even had cases where the buyer had no 'official' income and no income tax number — yet was able to fund an expensive home purchase. Obviously the Receiver will want to know how this is possible," Steward says.

When a transfer comes up for approval, the seller’s tax position will also be investigated — and if taxes are owing, the Receiver can and will insist on being paid from the sale income.

Buyers investigated

Previously these strictures were applied mainly to closed corporation and trusts. Today every buyer or seller is investigated, she says.

Although many developers doctor their sales prices to make them inclusive of transfer costs, on almost all individual home sales, the transfer money has to be paid in cash and prior to the transaction. This point, too, is apparently often not appreciated by buyers, she adds.

Article from: http://iafrica.com