Letter - It is generally accepted that one of the most important and expensive purchases a person makes in his/her lifetime is a house, flat or sectional-title unit.

The home becomes an asset not only to the purchaser, but also to his family, his children, grandchildren and great-grandchildren as it is often retained in a family for generations.

However, before parting with hard-earned cash, savings or retirement money, there are many pitfalls that a buyer may encounter in the process.

Since there is usually a large amount of money that will change hands in the acquisition of a property, the entire process must be approached with the greatest of diligence, caution and care.

In my experience, I have encountered many people who have lost their hard-earned cash and savings to fraudsters posing as legitimate estate agents and who collude with dishonest attorneys in stealing their money and leaving them without the property they hoped to purchase and occupy as their new home.

The method of operation used by the fraudsters is to usually place an advertisement in the classified section of a newspaper advertising the property for sale. 

The advertisement could also appear on a social media site such as Facebook, or Gumtree.

After responding to the advertisement and viewing of the house, the estate agent and in some instances the attorney, who work in collusion, will produce a preprinted sale agreement, request the buyer to sign the agreement and thereafter request him to either pay a deposit or the full amount of the purchase price in cash or into their bank accounts.

An occupation date is stated in the sale agreement and the buyer is left with the expectation that in about a month’s time the seller will vacate the premises and the buyer will then occupy the property pending transfer into his name by the attorney.

Upon the arrival of the occupation date, neither the agent nor the attorney will answer their telephones and, in some instances, will not be found at their offices.

To prevent being caught in the above scam, the buyer should verify that the estate agent is registered with the Estate Agents Affairs Board and is in possession of a current fidelity fund certificate.

The same caution will apply to the attorney involved in handling the transaction on behalf of the seller - that he has also been issued with a current fidelity fund certificate issued by the KwaZulu-Natal Law Society or from the law society in another province if that is where the attorney has his practice.

In the event of either of the parties - agent or attorney - not being able to produce a valid and current fidelity fund certificate for the year in which the transaction is occurring, the buyer is advised to stop all negotiations at this point.

While it is an accepted practice that the seller appoints the attorney who will attend to the transfer of the property into the name of the buyer, the buyer is entitled to instruct his own attorney to manage the transaction on his behalf.

The attorney instructed by the buyer will verify that the property is in fact owned by the seller and will also review the purchase and sale agreement to protect the interests of the purchaser.

Upon the buyer’s attorney verifying that the seller is the owner of the property and that the sale agreement protects the interests and money of the buyer, the sale agreement can then be signed by the seller and the purchaser.

The buyer should entrust the purchase price of the property to his own attorney, who will thereafter manage all the finances related to the transaction which will include the transfer fees, transfer duty, rates, levies clearance certificates, entomologists and electrical certificates.

Upon making payment either to the estate agent or the attorney, the buyer must request a receipt and the best practice will be for the money to be paid directly into the bank account of the estate agent or the attorney so that the buyer will be able to verify that the bank account in fact belongs to the person or firm receiving the money.

The process of having the property transferred from the name of the seller into that of the purchaser occurs at the office of the Registrar of Deeds in Pietermaritzburg. 

The entire process from the signing of the sale agreement to the registration of the property into the name of the buyer takes about three months to complete.

In the event of the purchase price being paid to the attorney prior to the registration of the transfer, the interest that accrues on the purchase price will go to the purchaser up to the date of registration of the property into his name at the office of the Registrar of Deeds.

In being caught up in the excitement of finding a house that one can afford, and by failing to follow the above precautionary steps, I have recently encountered several people who have responded to advertisements in the classified section of the newspaper and have lost all their money after being scammed.

In one instance, the purchaser who was caught in the scam, lost his entire pension fund payout of about R750000.

In order to save potential buyers the loss and anguish of being caught in this scam, I advise that the buyer does not sign any agreement or part with any of his money until he has had the opportunity to consult his own attorney who will first verify all the information relating to the property transaction.

The Estate Agents Affairs Board can be contacted at 087 285 3222 and the KwaZulu-Natal Law Society at 033 345 1304, Monday to Friday from 8am to 4.30pm.

* Umesh Jivan. BA, LLB - attorney, conveyancer, notary public and councillor of the KwaZulu-Natal Law Society.

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