Steps when selling residential property with title deeds
THE steps below are meant to assist property sellers and purchasers once the parties intend to enter into a sell agreement for a property with title deeds.
It is assumed at this stage where a sale is to be consummated that all the necessary due diligence processes will have been exercised. Such due diligence normally includes title deed searches, purchaser qualification and offer and acceptance.
It is recommended that these processes be handled by registered estate agents as they are professionally trained and experienced for such tasks.
In Zimbabwe, it is only estate agents who are allowed to sell properties on behalf of other parties but property owners can also handle their own sales without involving estate agents.
1. The sale agreement should be drafted diligently with clear terms and conditions on important aspects such as:
(a) Payment of purchase price — how, when and where purchase price is payable should be stated. For cash purchases it is normal that funds be paid to estate agent or conveyancer for disbursement to seller on transfer. Where purchase is being financed via mortgage funds, agreement should make validity of agreement conditional on granting of facility within say 30 days, failure of which that agreement would be null and void.
(b) Payment of rates responsibility — normally this is apportioned between seller and purchaser with cut off dates being transfer dates. This can however be varied where the purchaser takes up possession earlier or the seller remains in occupation beyond transfer date.
(c) Risk and profit — this will normally apply on transfer i.e. the purchaser takes responsibility and benefits (profit) on transfer of property whilst the seller is responsible for up to transfer.
(d) Possession — this will depend with agreement between the parties although it is normally recommended that possession be on transfer. Where the purchaser takes possession earlier than transfer then rentals become due and payable to the seller whilst the seller is also obliged to pay rentals to the purchaser should he remain in possession after transfer
(e) Utility bills — as for rates the cut off date for apportioning of responsibility between the parties is transfer date. Utility bills include rates and water, electricity and telephone charges. Arguments arise at times from sellers not wanting to take responsibility for electricity arrears claiming that it is the responsibility of tenants residing there in and that the new owner should pursue recovery on his own. That the property is occupied by a tenant does not remove seller’s responsibility to deliver the property to the new owner arrears free. It is for the seller to pursue his tenant/s.
(f) Tax obligations — the seller is responsible for payment of CGT whilst the responsibility for VAT on land and commercial property sales may be passed on to the purchaser
2. Once the agreement is signed by all parties the selling agent sends same together with title deed (original) to the conveyancers. Only conveyancers are eligible for change of ownership of properties in Zimbabwe. Title deeds may at times not be readily available from the seller should the property still be servicing a loan or mortgage in which event the loan or mortgage holder should be informed and enquired with on outstanding amounts.
The importance of checking outstanding loan amounts cannot be over emphasised as the debt needs to be settled first before title deeds can be released. Some purchasers have struggled to have title transferred due to the purchase price being inadequate to settle outstanding commitments and worse still when seller would have been paid off upfront before transfer.
3. The conveyancers arrange a rates clearance certificate with local authority.
This certificate is normally issued upon payment of rates covering six months as it is during that six months period that transfer is expected to go through. Should transfer takes place during that six month period then the rates are normally apportioned between seller and purchaser based on date of transfer.
4. It is also the responsibility of the conveyancer to arrange for issuance of CGT certificate by ZIMRA without which a property cannot be transferred. Sellers above 60 years of age are exempt from CGT payment provided they can provide proof that the property in question is principal private residence. No exemption applies to any other property if not a principal private residence.
5. Once all documents are in place the conveyancer lodges with Deeds Office, leading to cancellation of current title and issuance of new title to new owner.