Bank protocol causes delays in transfers

Revised rule means the wait for transfers in new developments is about a month longer

THE BANKS’ revised requirement that all approval certification is in place before transfer documents are submitted to the deeds office is delaying new development property transfers by a month on average.

So says Kim Pistor, legal adviser to Rabie Property Group, who warns the costs incurred through delays will inevitably fall on consumers.

Pistor says that before banks allow bonds to be registered against properties in new developments they require an occupancy certificate from the municipality, and National Home Builders Registration Council enrolment certificates, gas, plumbing and electrical certificates, builders’ completion certificates, and engineers’ certificates.

“The banks require these documents as part of their security over the involved property and for this reason they insist that these are in place by the time the transfer of the property registers in the deeds office,” Pistor says.

“Timing has always been particularly crucial when it comes to planning the transfers of sectional title units and handovers to buyers, which can only occur once all the documentation is in place, including the occupancy certificate from the municipality.

“Previously, the submission of the required documents to the banks could take place at the same time the transfer documents were being circulated in the deeds office – a process

‘This effectively means that transfers can be delayed by about a month while the documents are being obtained.‘

which generally takes three to four weeks.”

Pistor says it is unfortunate that banks have recently been insisting that these items are in place before the attorneys are permitted to lodge their transfer documents in the deeds office.

“This effectively means that transfers can be delayed by about a month while the necessary documents are being obtained to satisfy the banks’ requirements.

“The result is that buyers who have taken occupation of their property have to pay occupational interest and the developers’ holding costs to cover the extra month are increased – a cost which will inevitably have to be passed on to the consumer.”

She says it is regrettable that the banks are not open to negotiation and did not consult developers about these procedures. Also, their internal controls have become so computerised that access to their decision-makers is becoming more and more restricted.

Pistor says the banks would probably cite the National Credit Act and the Consumer Protection Act as the reasons for their having to be more careful.

“Unfortunately, this legislation has also resulted in banks raising their administration and initiation fees. In fact, the initiation fee charged by banks has jumped from around R300 a bond a few years ago to the current rate of around R5 700 a bond,” says Pistor.

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