Firstly, what exactly is a title deed and why check it?
In a nutshell, a “Title Deed” (also called a “Deed of Transfer” – they’re the same thing) is proof of who owns a particular property. It’s issued by the local Deeds Office after a conveyancing attorney has registered transfer to a new owner.
The title deed is a mine of crucial information relating to the property, its history, and conditions attaching to it. So check it thoroughly, it’s well worth the effort.
You may well pick up valuable pointers to the property’s value, such as what the seller paid for it and when, things that could affect what it’s actually worth to you.
If you don’t do a proper check, you could be in for a very nasty surprise down the line. To take just one example, you really don’t want to find out after you buy that servitudes apply and you must now live with neighbours crossing your property whenever they feel like it, or that you can never build that double-story you have dreamed of, nor subdivide when you decide to retire.
The reality is that our courts regularly have to deal with disputes arising from title deed conditions of which the buyer was blissfully unaware – until it was too late. And it’s no use crying “but I had no idea I was buying a property with a zoning restriction/height restriction/right-of-way servitude”. Because the property register kept by the Deeds Office is open to the public, everyone, including you, is presumed to have notice of registered rights like those.
You can get a copy of the title deed direct from the Deeds Office or online, but it will be easier to ask the seller (estate agent if applicable) or your lawyer for one.
So what should you look for before buying?
Look for the following in particular –
- Who the current registered owner is, when they bought the property and what they paid for it.
- What the property’s history is.
- The full description of the property, its erf or section number, exact size and references to boundaries.
- Any rules or contracts applying to it. For example if you are buying into a residential complex managed by a Home Owners Association, there is likely to be an obligation to join the HOA.
- “Restrictive conditions” relating to your rights to use, build, sell the property and so on. For example, no matter what the local zoning laws allow, you could find that you are specifically limited to residential usage only, or to a single story house built on no more than 50% of the erf, or you may not be able to subdivide a large piece of land.
- Real rights registered over the property. Because they are “real”, they come with the property and will be enforceable against you if you buy. And they can seriously limit not only the property’s value but also your use and enjoyment of it. Imagine for example if all the neighbours have a “right of way” servitude to use a road or footpath through your property. Or that someone has a lifetime usufruct giving them the right to live in your new house until they die.
- Any mortgage bond will also be endorsed on the title deed, as will the fact that it has been cancelled if the owner has paid it off in full – factors that may help you in deciding on where to pitch your offer.
- Each title deed will be different. Scrutinise it for anything else that may be relevant to your decision whether or not to buy, or to the price you are willing to pay.
Check that everything in the title deed ties in with the offer you are being asked to sign. And that you are happy with all obligations and restrictions on your use of the property.
Most importantly, even the simplest title deed can be full of legalese and pitfalls for the unwary. So as always, ask your lawyer for help before you sign anything.