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Sellers Beware — You May be in for More Than You Anticipated

01 August 2013

Hogan Lovells

Gone are the days when selling property was a simple process. With increasing developments in law, more and more obligations have been placed on a seller of immovable property. It is now, more than ever, prudent for a seller to familiarise himself with what is required of him at the outset of the sale process. This will allow him an opportunity to budget for those hidden expenses that may surface later.

A sale agreement In impose countless obligations on a seller. These may be imposed by legislation and regulations or by agreement between the seller and the purchaser. A seller may he required to provide the purchaser with all or some of the following certificates:

An Electrical Compliance Certificate
A seller may be required to obtain and pay for a certificate in respect of the electrical installation on the property, issued by a registered person (a qualified electrician) as contemplated in the Regulations to the Occupational Health and Safety Act, 1993. This certificate will certify that all electrical installations on the property comply with the Electrical Installation Regulations (that the property is reasonably safe). It must also he accompanied by a test report. The electrician may require certain remedial or rectification work to he carried out before he will issue the certificate; the work done will he at the seller's expense. If the seller is already in possession of a certificate of compliance, he can provide that to the purchaser, as long as it is not older than two years. However, should there have been alterations or additions to the electrical installation since the issue of that certificate, then the seller will be required to obtain a new one.

A Beetle Certificate
The seller may be required, in terms of the sale agreement, to have the timber on the property inspected for infestation by wood-destroying beetles, termites and fungi. Such an inspection can he carried out by an entomologist. If it is found that the timber is infected, the seller would he required, at his own cost, to replace the infested timber with timber pretreated against insects. This certificate is usually required for properties situated in coastal towns where such infestations are most common.

A Gas Certificate 
The seller may also be required to provide the purchaser with a certificate of conformity issued by an authorised person, as required in terms of the Pressure Equipment Regulations, 2009 to the Occupational Health and Safety Act, 1993, which must certify that all gas installations on the property conform to the required health and safety standards. Again, if corrective work is required to be carried out before the gas certificate can he issued, the seller will need to ensure that this is effected and will he responsible for the costs incurred.

Rates Clearance Certificate
The seller will be responsible for obtaining a rates clearance certificate from the local authority. This is a requirement in respect of all types of properties. The Registrar at the relevant deed's office will not register the transfer of the property into the name of the purchaser unless a rates clearance certificate is presented. The local authority will issue clearance figures (usually an estimated amount to cover rates and taxes for a period of about three to six months) and the seller will be required to pay the local authority this amount before it will issue the certificate. After the transfer is registered, the seller will need to apply to the local authority for a refund of any amounts he paid in respect the rates and taxes for the period subsequent to the date of transfer.

Levy Clearance Certificate
Where the seller's property is a sectional title unit, he will also need to obtain a levy clearance certificate from the body corporate of the sectional title scheme. The body corporate, like the local authority, will issue clearance figures and in doing so will estimate an amount to cover levies for a certain period. The seller will have to pay this amount and only on receipt of the payment will the body corporate issue the required certificate. The seller will be reimbursed for any levies that he paid in respect of any period after the transfer date.

An Electric Fence Systems Certificate of Compliance
With the latest developments in terms of the Occupational Health and Safety Act (85 of 1993), an electric fence systems certificate of compliance is now required to be issued where the property being sold has an electric fence system. This certificate must be issued by a registered electric fence installer (an accredited test laboratory). It is transferrable (the purchaser can keep the certificate issued in the name of the seller) and so the purchaser of the property will only need to obtain a new certificate if he decides to sell the property. It is essential, therefore, that the seller is aware of his obligations in terms of the sale agreement. He may be in for considerable expense, especially if he is required to pay for necessary repairs or replacing infested timbers, before the required certificates will be issued.

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