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PURCHASING PROPERTY IN SOUTH AFRICA AS A NON-RESIDENT

There are various issues involved in the purchasing of property in South Africa.

Restrictions:

Non-residents are subject to the same laws and regulations as South Africans. This ensures the efficiency of S.A's registration system.

Mostly property is registered in the name of the purchaser as an individual. If the individual got married outside South Africa, both parties have to sign all the documents. An individual may also purchase property with a friend/wife or family member. Should the non-resident wish to purchase property in the name of a legal entity, this entity must be registered in S.A. and meet the requirements of registration of the chosen entity, such as Companies Act. For example, the non-resident may decide to own the property through share ownership in a company, membership in a close corporation (unique to South Africa) or as a beneficiary in a Trust. If the non resident does acquire property in an entity then that money brought in represents a loan to the local entity which would require exchange control approval.

As a purchaser, you need to have finalized the documents for the entity you wish to purchase the property in before the offer of purchase is signed.

A non-resident can purchase property over the internet without entering the country; but if the purchaser intend residing in the country for any length of time, he/she will need to either have a valid permit to temporarily remain in the country, or be in possession of a permanent residency permit.

How do I bring foreign funds into SA ?

Foreign funds can be paid into any bank account in South Africa. Usually this account will be the transferring attorney's trust account into which the deposit for the property and the balance of the purchase price is paid. This money will be invested for the non-resident's benefit and the purchaser can rest assured that such a transfer is secure and guaranteed, as the operation of those trust accounts is regulated by the professional boards overseeing the attorneys' profession.

When the non-resident transfers funds into a South African bank account source, a record of the foreign funds entering the South African bank is kept and is known as a "deal receipt". This is an important document that must be kept for purposes of repatriation of the funds.

Can I borrow money in SA to purchase property?

The South African Reserve bank will consider all foreigners not having their domicile in South Africa to be non-residents, barring foreigners with South African work permits who will be considered residents for the duration of their work permit. This means that a non-resident is restricted to a maximum bond of 50% of the purchase price, the balance of the purchase price must be paid in cash.Foreign diplomats qualify for the same amount, and non-residents living in South Africa must have a work permit to get a loan up to 90%. In order to qualify for a South African mortgage bond, the non-resident will need the following: proof of income, 3 months original or bank stamped bank statements, passport and proof of residence.

Can a non-resident open up a bank account in S.A?

In order for a non-resident to service repayments on a mortgage bond, he or she will need to open a South African bank account which can be done from abroad or from within the country. Again, certain documentation relating to the applicant's identity will be required (application form with names, passport numbers / addresses, certified copies of relevant pages in the passport as well as proof of source of income such as salary slips/pension statements, all copies must be certified).Once open, foreign funds will need to be deposited immediately.

In certain circumstances, local currency can be deposited into the account, for example, receipt of rental acquired from property belonging to the non-resident. This is in order provided that the bank is in possession of a certified copy of the rental agreement. Obviously the rand value received on sale of immovable property in South Africa may also be receipted into the non-resident account providing the necessary documentation precedes the deposit.

Who chooses which attorneys will attend to the transfer and whose interests are the attorneys protecting?

In SA the Seller of immovable property nominates the transferring attorneys. Those attorneys then acton behalf of the seller. In the event of a dispute between the seller and purchaser, the purchaser would need to seek independent legal advice from other attorneys.

Can transfer and bond documents be signed overseas?

Yes, however, there are certain formalities that need to be complied with. Documents can be signed either before a Notary Public or at the South African Embassy in that country. It can be costly and time consuming though. If a seller or purchaser is in the country at the time of sale and will be flying back overseas, it is advisable for them to leave a special or general power of attorney in favour of either a friend or family member here in SA, to sign documents on his behalf.

The cost of signing at a Embassy or in front of a Notary Public will differ from country to country.

Other than the purchase price, am I liable for any other costs when purchasing property?

When buying property from a developer like M&T Development, the cost of transfer and the bond registration costs are included in the purchase price.

If you are buying from any other entity, transfer and bond costs will be for the cost of the purchaser.

Once the purchaser takes transfer of the property or assumes the risk therein, he or she will be liable for all costs and risks associated therewith.

If the property is not bonded, it will be in the purchaser's best interests to obtain insurance. This is compulsory if the property is bonded and normally arranged by the bank which issues the mortgage on that property.