Postages & petties
With spiraling telephone costs, postage rates and bank charges, most firms in the larger centres are recovering postages and petties (P&P) at about R250 for bonds, and R350 for transfers. (Note that P&P is intended to be a cost recovery, but since it is difficult to calculate the exact costs of all P&P related disbursements, a best-guess estimation is used.) In order to establish how much your firm could benefit from such an increase, do the following calculations:
(New bond P&P fee - current bond P&P fee) x number of bonds per month
E.g., R250 - R150 = R100 x 40 bonds per month = R4,000 monthly or R48,000 per year
(New transfers P&P fee - current transfers P&P fee) x number of transfers per month
E.g., R350 - R200 = R150 x 30 bonds per month = R4,500 monthly or R54,000 per year
Note, however, that there is no Law Society of South Africa (LSSA) regulation as to whether or not, or how much, firms can charge for postages and petties. But since the practice of charging for posts and petties has been around for many years, it is generally allowed as long as the charges are reasonable. (For more information, see the section below on what is included in the tariff.)
Deeds Office searches
Most conveyancing practices raise a fee for the Deeds Office search. Typically, firms charge between R45 and R120 for such a search, and the average appears to be around R80.
Electronic bond instruction charge
Not all firms raise a charge for the electronic bond instruction, but many do recover this expense. Banks believe that attorneys achieve cost benefits as a result of the electronic instruction, since secretaries don't have to capture the instruction information, and reporting is simpler. Nonetheless some 30% of firms do raise a fee of between R45 and R110 for this, with most charging between R50 and R80.
Admin fee for monies advanced
Where clients need bridging finance for rates clearances or transfer duty receipts, etc, firms can raise an administration fee in addition to charging interest for this service. Some firms carry the advances themselves while others use a bridging finance company. The administration fee varies between a fixed fee (R250 or more), and a percentage of the amount loaned. The interest is normally charged at an acceptable rate, such as prime plus 2 or 3%.
Firms are raising a fee of between R100 and R250 per Financial Intelligence Centre Act (FICA) investigation. Although this is a legal requirement that should be carried out by the banks (because the mortgagor is actually the bank's client) the banks seem happy for the conveyancers to do this on their behalf.
How else can a firm increase fees?
Increased service levels invariably result in increased fees. Faster turnaround times make clients happier. More progress feedback on bonds and transfers using technology such as SMS/Email impresses and retains clients. And a professional customer interface on the telephone improves first impressions of the firm.
Partners should spend more time talking to existing clients and looking for new clients, and less time buried in the day-to-day issues of conveyancing. While conveyancers should still supervise the conveyancing process, competent secretaries are capable of performing most tasks themselves.
Shopping centres have learned to sell as many products as possible to clients who come into their shops. However, this concept has not found favour with the conveyancing profession as yet. For example, if firms are successful, they may want to offer their own bridging finance to clients. Marketing other services to clients through newsletters after they have registered their bond or transfer can bring repeat business.
What about reduced costs?
The quickest way in which to reduce costs is to ensure that secretaries are properly trained. The more conversant they are with their conveyancing software, the more matters they can register in a month.
Firms should make extensive use of email and SMS functionality, as this reduces costs substantially. For example: fewer phone calls to clients, fewer phone queries from clients, faster communication between firm and client, instant transfer of documents, availability 24 hours a day and 7 days a week, etc. Firms that don't embrace email technology are wasting money. It is widely accepted that the cost of sending a fax or letter is in excess of R20. Firms should calculate how many letters and faxes they send daily!
What do banks want from panel attorneys?
Traditionally, banks have allocated business based on investments, service, and geographical location. However, things have changed in recent times, partly because banks allow their more affluent clients to specify the conveyancer for their bond, but more so because banks have given mortgage originators the right to decide which conveyancer should receive instructions for bonds sourced by them.
Banks admit that only 10%-20% of bonds can be allocated to conveyancers at their discretion. So while it is important to ensure that banks are getting the service levels they want from your firm, it is equally important to keep your other clients happy too - such as mortgage originators, estate agencies, developers, and existing clients of the firm.
And what do all of these 'clients' want from the conveyancer?
* Fast time to registration.
* Good feedback on progress.
With the increase in the number of panel attorneys over the past few years, banks have been stung by poor quality and poor service in too many instances. The result? Banks would prefer to have much smaller panels where they can be assured that the conveyancer is knowledgeable, documents are accurate, times to registration are quick, and their client receives good service. Smaller firms could be the losers if banks decide to shrink their panels, unless they are located in a unique geographical location.
Communication is an essential part of business, and conveyancing practices are not exempt from this requirement. Feedback to clients is the best way to offer great service and keep all parties in the loop. Send the mortgagor an SMS and send the mortgage originator an email when the instruction is received. Then send the MO another email when documents are signed. And again when the documents are lodged, up for prep, and registered. Also, send the mortgagor an SMS on registration.
SMS' and emails are much cheaper than letters and faxes, but since SMS' are still quite new, clients are always impressed when they receive updates in this manner.
While the pointers above are focused on bonds, much the same applies to transfers. The easiest way to understand what banks, mortgage originators, buyers/sellers and estate agents want from your firm is to look at it from their point of view.
GUIDELINES for determining FEES for CONVEYANCING
Prescribed by the various Law Societies
with effect from 1 March 2002
1. General notes
The fees specified in this tariff are in respect of and include inter alia the general conveyancing duties performed by a conveyancer for procuring the due and proper execution and registration of the relevant deed or document, or the filing thereof or cancellation thereof, as the case may be, as well as the responsibility placed on him for the accuracy of the facts mentioned in deeds or documents or which are relevant in connection with the registration or filing thereof as contemplated in section 15A of the Deeds Registries Act, Act 47 of 1937, as amended; for ensuring that copies of any deeds and documents are identical as at the date of lodgement, that all applicable conditions of title, including endorsements and township conditions are correctly brought forward in any deed of transfer or certificate of title, that any person signing a document as principal or representative has been appointed and is acting in accordance within the powers granted to him and that any security required has been furnished to the Master, that parties to deeds are correctly reflected, that the necessary authority has been obtained for the signing of any document in a representative capacity, that the transaction in question is authorised by and in accordance with the constitution, regulations or founding statement or trust instrument of a trust, as the case may be, of any church, association, close corporation, society, trust or other body of persons, or any institution (whether created by statute or otherwise) being a party to such document, where applicable, that the relevant particulars in the deed have been correctly brought forward from the power of attorney, as contemplated in Regulation 44A of the Deeds Regulations; and for this purpose shall include the taking and giving of instructions, all correspondence, including the perusal of completed deeds of sale; the preparation and attendance on signature of all powers of attorney, declarations, affidavits, resolutions, status affidavits, company certificates, exchange control certificates and other necessary preliminary and ancillary documents; the payment of transfer duty and of all rates levied by any lawful authority, the obtaining and making of all clearance and other certificates; the obtaining of endorsements or copies of documents from the Office of the Master or of the High Court or other public office (except where otherwise provided); the perusal of memoranda and articles of association and trust deeds, the making of all necessary financial arrangements, including the issuing of guarantees on behalf of bondholders or the provision and checking of guarantees and attending payment in terms thereof; the drawing and preparation of any document, including all copies thereof, required for execution or registration at a deeds registry and the obtaining of registration thereof, arranging simultaneous lodgement and registration with another conveyancer or other conveyancers, where necessary; the giving of all references required by the deeds registry for examination purposes; and all attendances at the deeds registry, but shall not include -
1.1 any attendance in connection with the drawing and execution of deeds of sale, deeds of donation, deeds of exchange, preliminary partition agreements, deeds of suretyship and acknowledgements of debt and documents of a similar nature; or
1.2 any separate act of registration of any other document which may be necessary before or in connection with the first-mentioned act of registration; or
1.3 any attendance in connection with the resolution of a dispute between the transferor and the transferee arising from a deed of sale or any of the other documents referred to in 1.1 above or from whatsoever cause; or
1.4 any attendance arising from negotiations between the parties, resulting in a further agreement or addendum or amendment to an existing agreement; or
1.5 any consultation for the purpose of drafting a marriage contract; or
1.6 any attendance relating to the opening of a township register in terms of section 46 of the Act; or
1.7 any attendance in connection with the preparation and obtaining of documents relating to collateral security required by a mortgagee.
The successful application of best practices will always yield increased profits - and conveyancing is no exception.