How to sell a home – When is a cash sale money laundering?
Selling your home is as exciting as it is stressful. Do you appoint an estate agent or try going solo? Whose offer do you accept if you get multiple offers to purchase? What regulations do you have to comply with before your home can be transferred?
7 Plans, legislative framework and how the CPA applies to sellers
Although it is not currently a legal requirement that the building plans must be in order before we can transfer the property, it is advisable to attend to this issue.
The purchaser who ultimately makes an offer on your property may make it conditional to the delivery of the approved plans.
Getting building plans approved at such a late stage can indefinitely delay your transaction. It can take up to four months to get the approval finalised.
Amended plans are needed if you have made structural alterations to the property, built garden walls, erected a wendy house or lapa and even if you have built a swimming pool.
Provincial legislation has already been promulgated in some provinces requiring confirmation from the city council that the plans are indeed in order before transfer can take place. It may very well happen that this legislation is incorporated into Gauteng’s provincial laws. Furthermore it may soon become a requirement of the banks that building plans need to be in order before they will give permission for registration.
In the case of sectional title units, the consequences can even be more severe as building plans and sectional title plans need to be approved.
FICA, together with other legislation, forms the cornerstone of attempts to curb and prohibit money laundering. The act requires that certain nominated persons and institutions like attorneys, banks and estate agents, verify and keep records of certain information and report suspicious transactions.
As conveyancing attorneys we are obliged by FICA to establish the identity of the parties to the transaction and to keep relevant records. Accordingly you will have to provide us with various documentation, for example your identity document and proof of residential address.
Apart from this, we have a statutory obligation to disclose and report certain suspicious transactions. FICA legislation has, as its primary objective, the prevention of the flow of money earned from illegal activities and the prevention of money laundering.
You must never become involved in a transaction where the purchaser offers to pay a cash amount directly to you, except if it is disclosed in the offer to purchase. If it is not disclosed you are probably assisting the purchaser with tax evasion (transfer duty) and possibly making the seller’s money laundering problem your own.
FICA legislation places an obligation on transferring attorneys to report to Financial Intelligence Centre (FIC) transactions where cash payments of R25,000 or more change hands. Not all cash deposits are necessarily obtained from illegal activities and as long as they are disclosed in the offer to purchase, declared to the FIC and paid into our trust account, you will be protected.
POPI is an acronym for the “Protection of Personal Information” Act. In terms of this act we need your consent to process your personal information (for example your identity number, contact details, email address). We will present this consent for your signature when you sign the transfer and/or bond documentation at our offices. Rest assured that we will only process your information for transfer, bond cancellation and/or bond-related purposes and that we fully comply with the POPI Act.
Consumer Protection Act
One of the primary objectives of the CPA is the protection of consumers within the commercial world. Not all transactions and business relationships are however regulated by the CPA.
Only transactions where the person selling the property does so in the normal course of business fall within the ambit of the CPA. Generally, the CPA will therefore not be applicable to the relationship between you and the purchaser unless you, as the seller, are a developer or speculator.
Estate agents do, however, provide a service to both the seller and the purchaser in the normal course of their business. The relationship between the seller and the agent on the one hand and the purchaser and the agent on the other hand is therefore regulated by the CPA. This MC SellersGuide is a step taken by us to assist estate agents to comply with this requirement.
In view of this most estate agencies will require you to complete a so-called property report. Because of the unfortunate wording in many of these reports the doctrine of unintended consequences is introduced and the common law protection afforded to the seller with regard to latent (hidden) defects is nullified. This exposes you unnecessarily.