The Transfer of Title Deeds 101

WE have been discussing over the past few weeks' actions that a homeowner can take to help sell their property for the desired price.  So you have done all these things, and now you have an offer on the property which you have accepted.

So what happens now?

You will now need to go through the necessary process to give ownership of your property over to the buyer.  This starts with having an Agreement of Sale that is signed by the Sellers, the Buyers, and the Estate Agent.

The Registered Estate Agent will draw this document up for you as a function of the sale.   The Agreement of Sale will state who the parties are and their details, what property is being sold, the price of the sale, and the conditions for possession of the property.

An Agreement of Sale, which is drawn up by a professional, should be clear, concise, and complete.
Once you have a signed Agreement of Sale, and the payment of the full purchase price, the Real Estate Agent will draw up a Letter of Instruction for the conveyancing attorney.  The Real Estate Agent is stating that the property has been sold and that the parties want the ownership of the home to pass from the Seller over to the Buyer.

This process is called the transfer of Title Deeds, also known as conveyancing.  All properties in Zimbabwe have a Title Deed registered at the Title Deeds office.

There is one in Bulawayo and one in Harare.  Based on the location of the property, your Title Deed will be lodged in one of these two offices.  All conveyancing has to be done by a lawyer.

To complete the transfer the lawyer needs the following documents. Original Title Deeds,  the Agreement of Sale, copies of the ID's of all the parties, signatures from the parties on the transfer documents, Rates Clearance Certificate, CGT Clearance Certificate (or VAT documents).

The conveyancing process normally takes four to eight weeks once all of the documents are submitted.

Let us look at all of the documents individually.  The original Title Deeds will be an exact replica of the Title Deeds held at the Title Deeds Office.  The Title Deed proves to the world who is the legal owner of the property.  Any outstanding mortgages or caveats are stamped on the face of the Title Deeds.  The cancellation of the mortgage or of the caveat are also stamped on the Title Deeds, being dated and signed.

If the original Title Deeds are damaged or lost, your lawyer can apply for replacement Title Deeds.  This process can take 4-8 additional weeks.

The Rate Clearance Certificate is obtained from Bulawayo City Council or Umguza Rural Council or from the relevant authority over the location of the property.

This certificate is issued if all rates are paid up-too-date, and are pre-paid enough to ensure that the Title Deed transfer will be accomplished prior to the rate bill being in arrears.  Generally, the rates need to be paid up to June or December, with at least three months pre-paid.  Once these conditions are met, the Rates Clearance Certificate is issued.  A Rates Clearance Certificate has a limited life span, and will go stale if the transfer is not carried out straight away.

The CGT Clearance Certificate is secured from ZIMRA.  CGT means "Capital Gains Tax".  Simply put any profit you make from a property sale is considered to be Capital Gains and is taxed.  The rate of the CGT can vary based on the currency used to buy and sell the house or property.

If the home was purchased in Zimbabwean dollars and then sold later in United States dollars, then the CGT is determined to be 5% of the selling price of the house.

This also applies if the house was bought in United States dollars, then later sold in Zimbabwean dollars.  It is judged that the profits may be difficult to determine, so the CGT is charged against the selling price only.  If the property was bought and sold in the same currency, then ZIMRA will calculate the amount of profit made and tax that profit at 20%.

Receipts for repairs and work done on the property can be produced to reduce the profit amount.  ZIMRA determines which case applies to the CGT calculation of the property, it is not up to you.  Older Sellers can apply for exemption from CGT if the house there are selling has been their "Principle primary residence".

Also there are provisions for "roll over" if the Seller uses the funds to purchase another property.  To receive your CGT Clearance Certificate all parties will need to go for a CGT interview and all CGT taxes assessed will need to be paid in full.

Once all this is completed, with the assistance of your Registered Estate Agent and your conveyancing lawyer, you will receive a brand new Title Deed.  This Title Deed will declare to the whole world that you are the proud new owner of a property!  Congratulations!

Jonathan Thompson is a Registered Real Estate Agent who works in Bulawayo.

He has nine years of experience in Real Estate in the USA, and another 10 years' experience in Bulawayo.  He is the founder and the Managing Director of Thompson Properties (Pvt) Ltd.  He has great interest in the Real Estate Industry of Zimbabwe, and actively invests in Real Estate.