PROPERTY NEWS - Buyers are not always aware of the added costs that are involved when purchasing a commercial property.
“Many potential buyers are also unaware of the distinct difference between transfer and bond costs, as well as what bond costs consist of or how they are calculated,” explains Leon Breytenbach, National Manager of the Rawson Property Group’s commercial division. “It helps to know to whom the bond costs are payable, what the money will be used for, whether VAT is applicable and if the costs are negotiable.”
When a bond is applied for by a purchaser in order to buy a commercial property, a set of bond costs will be payable if the applicant is successful. The purchaser must nominate a team of conveyancers to deal with the bond costs while the seller nominates the conveyancers to handle the transfer costs.
Both parties may nominate the same conveyancers if they so choose. There are three amounts payable to the attorneys handling the bond registration, namely: conveyancing fees, administration fees and Deeds Office fees. Only one fee is collected by the bank with whom the bond is to be registered, and this is the bank fee.
Conveyancing fee
This is collected by and payable to the bond registration attorneys and VAT is applicable. Simply put, it is payment for the legal work required and the generating of the necessary documentation for the registration of the bond. “The conveyancing fee is calculated as a percentage of the bond being registered,” says Breytenbach. “It is the one cost which may be negotiable, perhaps in a scenario where it is repeat business or the attorneys are used for doing other legal work for the purchaser."
Administration fee
Another fee collected and charged by the bond registration attorneys is the administration fee, and again VAT is applicable. “This is mostly a set charge, and is therefore not negotiable,” states Breytenbach. “It is required by the attorneys for the Deeds Office search on an existing bond, in order to FICA the parties, as well as for the postage and petty cash expenditure.
Deeds Office fee
This fee is also collected by the bond registration attorneys, but is payable to the Deeds Office and VAT does not apply. It is a set fee calculated by means of a tiered scale, according to the bond amount registered, and is therefore, not negotiable. "This fee is used for the purpose of updating the Deeds Office records with regard to the bond,” adds Breytenbach.
