2026.09.10 – Taryn Harris – Transfer Talk

0:005 FM 101.9 megahertz of life. This is Transfer Talk on the morning Mayhem Terran Harris in studio, she's a partner co-founder of Harris Marcus Mahlangu attorneys Terran Harris. Very good morning. Welcome back. Morning Howard. Terran is like now an old hat. Walks into studio, just everything. Nobody. Nobody needs to tell her what to do. It's really, really awesome and fun. Terran, let's talk about, and I'm really looking forward to this conversation because I think it is, it's so real. We often get into it and we've had this experience where maybe we've over-capitalized or we've put a lot into our home and then it actually is sometimes a bit difficult to sell because maybe people struggle to get a bond or it doesn't correlate with the area that you're in. Take me through the practical nature of this. Okay, so a lot of people have this idea.

1:01I'm no exception. My husband and I are no exception to this. We've decided to live here. We're going to put the money in our home. It's where we entertain. It's where we spend our time. And perhaps your home, suddenly when you start doing developments and improvements, becomes a lot more valuable than all the other homes around it. So there's obviously a difference between market related in what the estate agents say you can get for your property based on the fixtures and fittings and everything else and what a bank is going to value the property at. So your first hurdle is obviously getting it on the market and getting it sold. But let's assume you've done that and maybe you don't get exactly your price but you get in the ballpark and you've got a very excited buyer and the deal is done and it's subject to bank approval and what's important to note in South Africa is that the bank affordability,

2:02the way the bank determines a property, the value of it is very different than what an estate agent will value the property at. So if the bank goes and values this property, they don't just look at the fixtures and fittings and the actual bricks and mortar. They want to know specifically looking at all the other variables and the properties around it that if a buyer does default, so this is now assuming that the buyer doesn't have any affordability or credible credit issues. So that's happy with the buyer. So let's say the house is being sold for 10 million. And all the other homes around it, let's say, are worth 5 million, 4 to 5 million or 6 million. They're going to look at, never mind the buyer being able to afford it, which is separate. The bank value is going to look at the bank's risk that if the buyer were to default, what could they realistically get in this market, taking into account the sales

3:04in and around the area. So let's say the bank values this property at 7 million on the higher end of a 5 million range, but not 10. So now you've got a couple of problems. The buyer is going to think, well, maybe the house is only worth 7. That's not the case. Bank valuations and state valuations are very different. So again, if we sell this property as the bank after the borrower defaults, what are we realistically going to recover? The purchase price and the bank valuation then are two very separate concepts. The buyer now would have to think about how they're going to fund the balance. So let's say, for example, the bank has now valued this property at 7 million rent. There's a 3 million rent shortfall assuming the buyer gets 100 percent bond. Let's say they're only getting an 80 percent bond. Now you've got a large or shortfall because they have to pay now the 20 percent shortfall,

4:09the 3 million because the bank's only valuing it at 7 million plus all the transfer costs. So now it becomes a problem. You've got a buyer who does have credit who can afford 10 million. So you've got a willing buyer, willing seller, you've got a buyer that actually has the credit available, who isn't a credit risk, but actually because of where that house is, that's one of the metrics being looked at, the banks are going to find it difficult to give the bond for the value that the person has paid. Correct. So it's very important when the buyer is looking at these things, when they start looking at properties, and there's nothing wrong with buying this beautiful home. So that's anything wrong with it? The area you want it, it's a stunning property. You don't have to, you can literally move in and do nothing. It's fantastic. But the problem is you've got to start now thinking how are we going to structure this.

5:09So that's because I just want to, again, say affordability determines what the buyer can afford and how they can service the loan, but a property valuation determines with how comfortable the bank is with its security. So there are two different concepts. So there's different ways, I as an attorney, if I were brought this problem by the estate agent, how we would structure this. So we'd have to look, for example, how much money does the seller owe the bank in their existing bond? What is the estate agent's commission? Can we structure a second ranking bond in favor of the seller for the balance? Are they willing to forego three million rent upfront and get that over a period of time? Can we structure it differently? So it's very important if you, if you faced with a situation either as an estate agent or as a buyer or an seller that you do have the right attorney who can help you structure these deals. Exactly, because the right attorney has the experience to say, okay, this is one way we

6:14could do it. Maybe that'll work for the audience. Maybe there's 100%. And maybe there are other ways, but it's very important if the agent doesn't have the experience. And they wouldn't necessarily have the legal experience, but maybe they've been doing it for so long they've faced this before. But it's important. And what goes along with that, which is very important, is transfer duty. So transfer duty, most people think it's based on the sale price. Transfer duty is not based necessarily on the sale price. Trans SARS is very clever. As we know, they want to get as much money as profit as they can. Transfer duty is based on the higher of the market value or the purchase price. I didn't know that. Exactly. So let's say most people don't. And they are based on the actual price. So now you think you're getting a deal. Now we have the opposite. Now you're buying the lower end property in a higher end area. And let's say you're buying a 3 million ran property in a 6 million ran area.

7:16So now the market area is determining this to be a 5, 6 million ran property. Or the other issue is the seller is selling it at a loss. So they bought it in a market that was booming. And now they're selling it and they're losing money. So SARS knows the previous sale price. And they're going to think of inflation and everything else. Now they want to charge transfer duty based on the higher of the two. So it's up to us. When we have this, we immediately go and get two independent state agent valuations to submit to SARS to say no, no, no, no, no. What you're saying is the market value is not. We just prove with two independent agents to tell you that the market is saying it is not worth this price. It's actually worth the lower price. We submit that to SARS to the buyer pays transfer duty on the lower amount. So it's very, very important whether it's on the high end or the lower end, you understand the intricacies surrounding this. So a lot of what you're saying is telling me that you want to bring in an expert as early

8:27on in the process as possible. Absolutely. I mean, you can do that negotiating stage. Correct. Because that's how you can structure it in a way for actually for both parties because everybody wants the deal to go ahead. I said I want to sell their property. So now you're a buyer, you want to make sure that this has the best chance of succeeding. At what point do you think would you recommend that somebody makes contact with you? That's an interesting question. So I'm just going to go back to your last point before I come to that. It's very important. People must realize conveyances are very interesting and unique attorneys in the sense that their job, although they're being paid by a buyer, generally they're appointed by a seller, but their job is to represent both parties, the interests of both parties. As much as they are appointed by a seller and paid by a buyer, if there's ever, it becomes

9:27litigious, they have to remove themselves because they're supposed to represent both parties. I wasn't aware that's interesting. So if it goes down the delegation of sellers as you need to represent me, I would have to remove myself. But that's interesting because that really does show that you're representing both at a time where the buyer and the seller both want the same thing, which is a successful seller and purchase of this property. My job is to explain the legal ramifications to both parties, the practical ramifications, and then they must make a decision. And if it is going to go further than what I'm able to realistically assist with, I would suggest they would go seek alternative counsel. So just to go back to your party, at one point do you bring? An attorney in. So an attorney, a conveyance can be brought in at any point, up until obviously the deal is done. But ideally, a conveyance can be approached when you're thinking about selling. And you say, look, you can do it before you have an estate agent. And you can say, this is what I'm thinking about. Are the things legal issues that I need to start thinking about at my home?

10:30Generally at the time you want to list your home or at the time you are selling your home, either when you're appointing your estate agent or prior to appointing your estate agent, you can speak to a conveyanceur. If you're not going to use an estate agent, obviously, you would need to contact a conveyanceur to assist you in drafting. And a buyer can do it as well at any stage and say, can you review this contract for me? We get a lot of the buyer would say to me, listen, I'm going to see if I can appoint you as a condition of the sale. Please can you review this agreement for me? I need to know what my risks are. Are there ways I can get out? Is it heavily biased towards me or against me? Yeah. And how can I structure this? You've really changed my view on this because I really think that prior to all of these discussions, I had this concept of the conveyanceur really, at some point, right, then you appoint the conveyanceur and that will take care of that aspect.

11:31That the way in which I see it now through these conversations is that the earlier, the better because get structure properly, get the advice and it works for both parties. And the estate agent, you know, it's very important. I mean, estate agents have a lot of ties, the personal relationships with attorneys or they've had very good experience with attorneys. But at the end of the day, you have to make sure you're partnering with the right person because like the last conversation I had, you want to make sure that when you're in you actually take occupation or take registration, the home is what you saw. And you know, you need to make sure that these sorts of clauses are in there to protect you. You don't want drama after. You know, you want to have, you don't want to buyers remorse. So you don't want to be in a position of a seller thinking you got ripped off or you're spending too much. So if these clauses are drafted in and the attorney either helps the agent or helps the seller or helps the buyer, and at the end of the day, our job is to make the deal go through. You know. The job is to sell and get the deal done.

12:34My job is to make sure it's as smooth as possible that the transfer of ownership takes place. So it would be, you know, we need these conditions and we need these terms in there. How do we structure this? That the buyer can afford this. Is there a way the seller can assist the buyer? Can the buyer find this in a different way? Are there movables on the property that we can? Well, these are some of the things that we've spoken about over the last few weeks and that really does, it really does impact. That's where we do need to leave it though. Terran Harris, thank you. As always, partner co-founder of Harris Marcus, Maclangu attorneys and wishing you and your family a sonatova, a wonderful, wonderful year ahead. Thank you to you too, Howard. Thank you.