The sale price of a property is not the amount a seller receives.
What a seller ultimately keeps is determined during the transfer process, once all required amounts linked to the sale have been settled. The difference between the sale price and the final payout depends on costs and obligations that must be cleared before ownership can change.
The sale price is the amount agreed to in the Offer to Purchase. Net proceeds are the funds paid out to the seller after all transfer-related amounts and agreed deductions have been accounted for.
After signature, the transfer attorney gathers the figures required to lodge and register transfer. Where a home loan exists, settlement and formal bond cancellation are arranged as part of the registration process.
The seller’s conveyancer applies for municipal rates clearance figures and requests payment from the seller. Once paid, the conveyancer settles the amount required for a rates clearance certificate before transfer can be registered.
For sectional title schemes, and often estates or homeowners’ associations depending on their rules, the conveyancer obtains the necessary clearance certificates confirming that contributions due are paid or that satisfactory provision has been made.
Commission is paid to the property practitioner in line with the mandate and the Offer to Purchase and is deducted from the proceeds on registration.
Seller proceeds are paid only once registration is confirmed by the Deeds Office. Occupation arrangements can affect the final payout. Where the buyer occupies before registration, occupational rent usually increases the seller’s proceeds. Where the seller remains in occupation after registration, occupational rent is payable to the buyer and reduces the seller’s payout.
The remaining balance after deductions and adjustments represents the seller’s net proceeds.
Read: Selling a Property? Here is Your Roadmap
In most residential transactions, buyers are responsible for transfer duty and transfer attorney fees. This does not mean sellers incur no costs.
Several expenses are typically payable by sellers and directly affect the net proceeds released on registration. Which costs apply depends on the property type, timing of the transaction, and the wording of the Offer to Purchase.
Commission is agreed between the seller and the practitioner and recorded in the mandate and Offer to Purchase. It is not prescribed by law and may be structured as a percentage, fixed amount, or another agreed arrangement.
In most cases, commission is settled on registration and deducted from the sale proceeds by the conveyancer. Because it is deducted at registration, commission has an immediate impact on the seller’s net proceeds.
Where a bond exists, the outstanding loan balance must be settled and the bond formally cancelled before transfer can be registered.
In addition to settling the bond balance, the bank appoints an attorney to cancel the bond in the Deeds Office. Bond cancellation is a formal legal process and carries a cost payable by the seller.
Even where a bond has been settled in full, it must still be formally cancelled. Where title deeds were never released after settlement, sellers may only discover this cost during transfer.
Banks generally require advance notice of cancellation, often around 90 days. Where notice is late, additional interest may accrue and is commonly settled on registration, reducing the seller’s proceeds.
Compliance requirements depend on the property, applicable municipal regulations, and the terms of the Offer to Purchase.
Compliance certificates may relate to electrical installations, gas systems, electric fencing, plumbing or water installations, solar systems, beetle infestation, or other regulated features.
Inspections may identify defects requiring remedial work before certificates can be issued. While certificate fees may be modest, repairs can significantly reduce the seller’s final payout.
A municipal rates clearance certificate is required before transfer can be registered.
Municipalities usually require advance payment of rates and taxes, often equivalent to approximately three and a half months. Where accounts are in arrears, the required payment increases accordingly.
Although these payments are adjusted on a pro-rata basis after registration, they affect cash flow and reduce the amount available during transfer.
Sectional title properties and many estate or HOA properties require levy clearance certificates.
Sellers are often required to pay levies in advance and may incur administrative fees charged by managing agents. These advance payments reduce net proceeds and can delay transfer if documentation is late.
Rates, levies, and certain utilities are apportioned between seller and buyer based on their periods of ownership.
Depending on timing and occupation arrangements, these adjustments may increase or reduce the seller’s payout on registration.
Capital gains tax may arise where a property is sold at a profit.
Primary residences may qualify for a SARS primary residence exclusion, while investment, rental, company-owned, or trust-owned properties attract higher CGT exposure.
CGT is not settled through the conveyancing process and is dealt with through the seller’s income tax return. Although proceeds are received before CGT is paid, it affects the seller’s true financial outcome.
Not every sale triggers every cost. Properties without bonds avoid bond charges, freehold properties do not incur levies, and CGT depends on ownership and use.
The Offer to Purchase allocates responsibility for costs where not governed by law. Any expense assigned to the seller reduces the amount paid out on registration.
Sellers should review cost-related clauses carefully and not rely on assumptions of standard practice.
Read: 10 Important Clauses in an Offer to Purchase
Many seller costs must be paid or secured before registration. Although recovered from proceeds, they can place pressure on cash flow during transfer.
Ownership passes only once transfer is registered in the Deeds Office.
Until registration, funds are held in regulated trust accounts. After registration, the conveyancer settles all outstanding amounts and releases the balance to the seller.
Sale proceeds are processed through a legal practitioner’s trust account. Release of funds typically occurs within three to five working days after registration, subject to banking clearance.
The amount paid to the seller represents the net proceeds of the sale. This reflects the sale price less all statutory charges, contractual deductions, and adjustments made during transfer.
At CHA Properties, pricing strategy, offer terms, and transaction timing are assessed with full regard to their impact on registration, settlement, and net proceeds.
If you are considering selling your property and want clarity on what you can expect to receive after transfer, our real estate agents and property professionals can guide you through the process.
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