Woodhead Bigby - The Covid-19 Lockdown in South Africa and its Impact on the Property Transaction Pipeline

07 April 2020

In March, the Covid-19 pandemic hit South Africa and our President declared a 21-day national lockdown. We all understand that the lockdown is in the country’s best interests, and is designed for our protection, but it can be a cause for concern to those who are involved in a property transaction.

The property industry is not considered an essential service during the lockdown. This resulted in the temporary closure of deeds offices, estate agencies, as well as the offices of legal practitioners, whose sole focus is property and conveyancing transactions. Although many practitioners are able to continue their work remotely, progress on property transfers is limited, due firstly to the many steps involved in a conveyancing transaction, and secondly, the various bodies with which they are required to communicate (e.g. municipalities, local authorities, banking institutions, and SARS).

The offices of Woodhead Bigby are currently closed, however, our Attorneys, Notaries and Conveyancers are still hard at work.

The reality is that the national lockdown will delay registrations of property transfers and mortgage bonds.

The extent of the delays will depend on where your transaction lies in the property transfer pipeline.

Let's address some common questions about the technicalities:

1. How will the lockdown affect the rates clearance certificate application?

A rates clearance certificate is required before a transfer of a property situated in a municipal district can be concluded. Many municipal departments that issue rates clearance certificates countrywide have closed. This means that no assessments of annual or monthly rates on properties can take place. And, applications for clearance certificates that are already in motion will only be processed when the offices re-open. It is inevitable that there will be a backlog of applications when the offices do re-open, so a property transfer could be delayed by 1 or 2 months depending on where the application for clearance sat before the lockdown.

2. When will registration take place?

The Pietermaritzburg Deeds Registry closed on 26 March 2020, and no paperwork relating to property transfers or mortgage bond registrations can be submitted to the offices until they re-open. The closure will certainly affect the timing of property registrations. The extent of delays will depend on whether any paperwork had previously been submitted to the Deeds Office before the lockdown. It is likely that when the Deeds Office re-opens there will be an organised and controlled examination process to assess the validly dates on various documentation. Depending on the particular transaction, the delay to the expected date of registration will vary. It might be that some certificates will need to be re-signed, causing just a few days delay, on the other hand, there could be a number of weeks delay if certificates need to be re-issued.

3. When will I be able to move into my new house?

If you were planning to take occupation on the same date that the property is registered in your name at the Deeds Registry, then you will need to be patient. The occupation date will be unknown for quite some time unless you agree to a specific date with the existing owner/seller. Regardless of an agreed date, occupation will not take place before the lockdown is over. When all offices re-open, and there is some certainty on how transactions are being processed, your conveyancing attorney will have a better indication of registration and occupation dates.

4. Is the lockdown going to cost me money?

It is likely that the lockdown will result in people spending more money than they anticipated. Sellers who were expecting to settle their mortgage loans, and collect the balance of the money from the sale of their house in April, might only collect their money a few months later. This could result in one or two more debit orders for mortgage bond instalments than were planned. Estate agents that were expecting payment of sales commission on property registrations in April are likely to have to wait a few more months before receiving payment.

Everyone involved in a property transaction will be financially affected by the delays inflicted by this lockdown. Your conveyancing attorney will be the best person to help you identify where the biggest cost will be for you. Each property transaction is unique and each person will be affected differently.