The conveyancing procedure can be daunting for non-resident purchasers of South African property, but with expert assistance from an experienced conveyancing firm such as STBB (Smith Tabata Buchanan Boyes), there is nothing to fear. Here are the answers to some frequently asked questions.
For any other questions regarding non-resident ownership of property in South Africa, contact STBB for assistance in all aspects of your transaction, before concluding the deal.
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Non-residents may fund the property acquisition wholly with foreign funds introduced into the country by means of electronic fund transfer. Unfortunately, foreign drawn cheques at a bank in South Africa and similarly, foreign drawn guarantees, are usually not acceptable to secure the payment of the purchase price.
Ignoring any other Loan to Value restrictions (for example, the purchase price, etc.) South African banks will consider foreign finance as follows:
For a property transaction to be processed, various documents will require signature by the seller and purchaser. It is not necessary for a foreigner to be physically present in South Africa to sign their transfer documents but in such instance, it is advisable to prepare and sign a General Power of Attorney in favour of a third party in South Africa, so that the latter can sign the necessary documentation on the foreigner’s behalf.
Otherwise the documents can be signed outside of South Africa provided they are duly authenticated, meaning they must be signed at the offices of a South African embassy or before a Notary Public in that country.
The attorney appointed in the sale agreement to register the transfer of ownership will appear before the Registrar of deeds and sign the title deed whereby ownership is passed. It is not necessary for the non-resident purchaser to be present in South Africa at the time. He will be notified of the registration of the transaction by the attorney.
Non-resident sellers may transfer the full proceeds from the sale of immovable property out of South Africa provided that the following conditions are complied with:
South Africa’s exchange control provisions are quite strict, but the golden rule remains that if the nonresident seller can prove that the funds used to acquire the property was either wholly introduced from a foreign source, or partially from a foreign source with the remainder of the funds secured by way of a local mortgage bond, the non-resident will be allowed to the transfer the full proceeds realised abroad, less a withholding tax ranging from 7,5% to 15% (depending on whether the buyer is an individual, a foreign buyer, or a foreign trust), which applies when the proceeds per person is in excess of R2million.
It is of critical importance that the following documentation obtained when the property is acquired is retained for the day when the repatriation application is to be submitted for exchange control approval:
STBB offers a fantastic solution in respect of the secure retention of all the required documents through their recently launched E-Vault service. This service stores the most relevant documents pertaining to the transfer as well as the required documents for exchange control purposes, safely in an electronic vault which is accessible to the client at any time. This service eliminates the uncertainty of paper archived documents, which may be destroyed after 5 years, or lost documents.