INVESTMENT
A Foreign Offer
Avoiding the pitfalls of property transactions with non-residents
BY SAMANTHA BARTLETT
Buying and selling property includes a mountain of legal paperwork and some measure of patience at the best of times, but the process can get even trickier when one party is a not a South African citizen or permanent resident.
It’ s therefore crucial to appoint a specialist conveyancing attorney with experience in this field, especially if the transaction is to be concluded at a time when the foreign party isn’ t in South Africa, because additional documentation is required and procedures when signing agreements can vary depending on the country in which they reside.
This is according to Danielle Abrahamson, Specialist Conveyancing Attorney at Mcloughlin Clark Incorporated, who says:“ Just one missing signature or incorrect document can delay or even compromise a sale, and the repercussions can be costly.”
Abrahamson says it’ s often the small oversights that impede the successful conclusion of a deal, and it’ s therefore essential that estate agents and conveyancing attorneys familiarise themselves with the local laws relating to property transactions with foreign nationals, and that buyers and sellers know what questions to ask. These include:
Spousal signatures- When non-residents purchase property in South Africa, their spouse’ s signature is not required although the transfer document must state by which country’ s marriage
laws their union is governed. However, when a foreigner sells property in South Africa, the spouse’ s signature may well be required.
Signing of transfer documents- If the foreign buyer is signing the transfer documents outside of South Africa it must be done at a South African embassy or consulate, but this isn’ t always practical or cost-effective as embassies are often far away or entirely absent in some countries.
If the country in which the buyer will be signing the documents is a member of the Hague Convention, he or she can sign in front of a Notary Public and an Apostille will be attached. The Hague Convention is an international treaty which sets out how documents can be verified and an Apostille is the certification.
Should the country not be a member of the Hague Convention, such as Saudi Arabia or Ghana, then an Apostille is not acceptable and once the documents have been notarised they need to be sent to the Department of Foreign Affairs for authentication. The simplest option to avoid these tedious processes is for the buyer to sign a Special Power of Attorney authorising a person in South Africa to act on their behalf, because many foreigners aren’ t necessarily in South Africa when the various documents need to be signed before the transaction is concluded.
Withholding tax on purchase price – When a foreigner sells a South African property valued at more than R2 million the purchaser is legally obliged
40 SEPTEMBER 2016 SA Real Estate Investor www. reimag. co. za