Risk Alert Bulletin - 2

The facts of all the conveyancing claims that have been registered for the last three years were analysed. Listed below are more of some of the most common examples.

1. Failure to check the identity of signatories to conveyancing documents/not insisting on conveyancing documents being signed in presence of the conveyancer/failure to establish if the signatory has the required authority to sign/ fraudulent use of conveyancing documents.
   
   Conveyancing documents should always be signed in the presence of conveyancers. Always check not only the identity of all parties signing documents, but also if they have the necessary authority to sign. Wherever possible, conduct company searches, obtain copies of ID documents, trust deeds etc.
   
   
2. Failure to obtain written authority to invest trust monies not immediately required for use, or investing trust monies at an institution which is not accredited with an AAA bank rating.
   
   Always obtain full written instructions from a client on where to invest monies, which are not immediately required. Check the ratings of the particular bank and preferably always stick to banks with AAA ratings.
   
   
3. Payment of purchase price to the seller before transfer is registered (risk of seller going insolvent)/transferring of property before full purchase price paid into trust.
   
   Always retain any money in trust and never pay over the purchase price until transfer has been registered. Advise purchasers against making improvements to the property until registration has been completed.
   
   Transferring attorneys are also duty bound to safeguard the legitimate interests of both the seller and the purchaser, especially if one of the parties is unrepresented. The amount paid in by the purchaser should remain in an interest bearing account for his/her benefit pending transfer.
   
   
4. Failure to familiarise oneself with the terms and conditions of the Deed of Sale, including remedies provided for breach, procedure to be followed for cancellation, method of payment of the purchase price, suspensive conditions, payment of commissions etc.
   
   Ensure that all the conditions are met before transfer is registered. In the case of a breach or cancellation, always revert to the Deed of Sale so that the correct remedy can be implemented.
   
   
5. Problems with financial aspect of the transaction e.g. Vat, transfer duty, cancellation figures and guarantees.
   
   Look carefully at the issues of Vat, transfer duty etc in order to avoid making mistakes which may only become apparent once transfer is registered, and which mistake can then not be rectified.
   
   If you are uncertain as to whether Vat or transfer duty is payable or whether a particular transaction is zero rated, consult with the South African Revenue Services and/or a tax consultant.