Home loans, offers to purchase and deeds registration during Covid-19 | What you need to know

Restrictions during Covid-19 have certainly complicated the process as only certain parts of the real estate industry returns to work under Alert Level 4. Here's what you need to know. 

While the Deeds Office has been included in the essential services able to operate under level 4 lockdown regulations - some have not opened as yet due to protocols that need to be put in place related to hygiene, limited staff, access control and cleaning, says Nicholas Hayes of Abrahams and Gross Attorneys.

"Once the Deeds Office has re-opened we anticipate that the matters which were lodged in the deeds office will be dealt with first and allowed to register. We also anticipate that lodgements of new transfers will follow in due course.

But it is unclear what the turnaround times will be going forward.

READ: Evictions during Covid-19 | Here's what you need to know

"Suffice to say that you should anticipate delays given that there will be a skeleton staff operating and a large number of lodgements are anticipated. All parties (sellers/buyers) should make appropriate arrangements via the conveyancing attorneys or estate agents and enter into addendums to their deeds of sale to extend their transfer dates should occupation be a requirement of transfer.

"Similarly where purchasers are currently renting properties pending transfer, they should make arrangements to extend their leases up until such time as they are able to move into their houses," advises Hayes.

Offers to purchase and home loan approvals

Property buyers who are accustomed to a regular salary cheque are concerned that they will no longer qualify for a home loan, as many consumers face the dire reality of a salary cut, retrenchment, or shorter working hours. All these events can result in a substantial reduction of income.

Self-employed home buyers are also left with little or no income during and post lockdown.

Already, financial institutions have indicated that they will review all approved but not yet registered home loan applications - with one financial institution only approving 8% of the home loans received in March, according to Meyer De Waal of MDW INC Attorneys of Cape Town.

Their May and June approval rates are expected to be even lower, he says. 

Sellers are concerned that their properties may remain on the market for a longer period of time, or that cash property buyers will offer them lower, "cheeky" offers on their properties.

In such a climate of uncertainty and economic hardship, how does a seller refuse such a lower offer? How does a buyer obtain the necessary finances to fund their new home?

READ: How to apply for a home loan on a single salary?

Collective Experience and National Footprint 

A group of conveyancing firms have pooled their services, knowledge and resources to assist home buyers, property owners and sellers, according to De Waal, Chris Fick and Charlene Nolte Joubert - who launched the initiative.

Covering a national footprint with offices in the Western Cape, Free State, Gauteng, Northern Cape and KZN, the combined legal skills and a lifetime in years of experience form the basis of the educational information disseminated; and assistance provided.

"In addition, we invited other industry stakeholders to aid with online training and education for attorney's firms, as well as service providers that specializes in debt and affordability negotiation and improvement, home ownership education and assistance with Government subsidies for first time buyers.

"We all have our own independent legal firms, but we realized that we have to tap into the collective years of property and legal experience, as well as utilize the national footprint of our association of skilled conveyancing attorneys working in unison, says De Waal 

 "Now that we realize the demand and how easy it is to host and facilitate such information sessions, we have reached out to other stakeholders in the property industry to collaborate," says Charlene Nolte-Joubert of Henkes, Joubert Barry Attorneys. 

Debt Repayment Negotiation

"Considering that many aspiring property buyers and existing home owners will face debt and budget challenges, we teamed up with a reputable debt and budget repair specialist group to aid those who may encounter problems in negotiating their debt commitments," says de Waal.

"Our focus is to aid the consumer, be they a property buyer or an existing home owner. We do a proper analysis of debt exposure and commitments and compare such with the real income of the client.

"We then assist with a proper budget plan and negotiate lower payment instalments with credit providers.

"We aim to assist consumers not to damage their credit profiles during the Covid-19 period. A damaged credit profile may take years to repair and keep a property buyer away from owning a home, says Paul Slot, managing director of Octogen.

Property finance solutions workshops

We have already teamed up with Housing Investment Partners - (HIP Housing), who recently announced that they raised their home loan amounts from R650 000.00 to R950 000.00, says De Waal. An information session is also scheduled to explore all types of property finance available, says De Waal. 

READ: Buying a new home? 8 key steps in the property transfer registration process

Online Education for home buyers combined with financial literacy?

The online home ownership educational modules developed with a leading financial institution as well as a property group with some 11 000 tenants are also made available to all property buyers.

Research show that 50 % of property buyers are first time buyers. These online educational videos form the basis of the journey that every first-time buyer need to follow.

The aim is to ensure that such a home buyer has a proper understanding of his or her ability to raise a home loan, what Government FLISP subsidy the buyer can qualify for, how to find a property to buy and then conduct a proper due diligence on the condition of the property and improve a low or bad credit score; if the home loan application is declined.

The online home ownership material of Consumer Housing Education was recently incorporated into a financial literacy programme and this will ensure that the property buyer will be a well-educated home buyer when buying a property, which will be most likely the biggest investment one will make, says Patrick Ngondweni, MD of My Budget Fitness who focuses on education for first time home buyers.

SEE: 12J tax break, FLISP or Transactional Wallets | 3 ways to ease into real estate investment

Helpline for Property Owners - Debt Relief Campaign

With all the tools, experience and skills available through this collaboration, a help-line is set up for property owners who face difficulty in repaying their home loan instalments and other credit instalments during and post Covid-19 lockdown restrictions.

Relief is available through Government and related institutions, but no institution or organization provides immediate and personal assistance to the individual who faces the dilemma of being unable to pay credit agreements.

A help-line debt relief campaign  is available to distressed home owners with a mortgage to pay, as well as every person "out there" who is stressed out, with overdue payments for credit agreements looming.

Every attorney in the association can make use of this service and offer such to their clients.

Property Inspections

Buying a property "voetstoots" can be the biggest risk a home buyer can take says Eric Bell of Inspect-a-Home. The home inspection report services that we offer forms part of the services to home buyers and the collaboration of Attorneys.

Virtual Reality Tours

With the continuous strides made in communications technology, a versatile range of tools has become available to minimise personal contact but ensure the property industry can still function.

"The availability of Virtual Reality Tours, hosted through a collaboration with a leading service provider in the VRT industry, enables a property buyer to view properties on the market remotely without leaving the comfort of his or her home," says Wimpie Ferreira.

The Attorney Realtor Hub was one of the first to explore this new technology a few years ago, offering the comfort of virtual reality tour to their property sellers and buyers.

Online Document Vault - Access to your legal documents and files online

It became apparent to us during the lockdown period that many of our clients were unable to obtain access to their own office, and unable to get access to their files.

The Online Legal Document Vault provides access to legal & personal documents, and files online.

Customers can download an App or Mobi shortcut on their phones or any electronic device and have 24/7 access to their current and past transactions. The customer can view a host of their documents such as property transaction reconciliations, property compliance certificates(beetle and electrical compliance certificates), last will and testaments, lease agreements, Trust agreements and resolutions- all online, says De Waal.

Mediation Services

Property Lawyers are natural mediators as they resolve disputes on a daily basis in their conveyancing practices.

Some disputes will require the assistance of a trained mediator, who will use specialised skills and processes in order to achieve a satisfactory outcome.

With the introduction of High Court Rule 41A, which came into effect on 9 March 2020, mediation will now form an integral part of all High Court litigation.

Mediation has now been placed in the spotlight and both the public and attorneys have a keen interest in this process.

However private mediation, outside the court process, has been part and parcel of the South African legal landscape for more than 30 years. 

With most Courts and court processes halted by the Covid 19 lockdown, mediation has become the go-to process to address and resolve disputes, says Chris Fick of Chris Fick and Associates, who is also a founding member of AIM (Association of Independent Mediators) and Attorney Realtor Hub. 

Mediation Online

Already the mediation process is an agile, cost effective and highly efficient process. With legal professionals and the general public turning to online processes to assist them with their work and to keep in contact with clients and colleagues, it also became apparent very early on that mediation can be done very effectively by using online platforms such as Zoom and Microsoft Teams.

All disputes, but specifically all property disputes, can be addressed and resolved by making use of mediation. 

AIM will be presenting a number of webinars in which the process as well as the benefits of mediation will be introduced to all our colleagues, interested property owners, buyers and sellers.

The webinars will indicate how online processes can be used effectively to resolve disputes in a satisfactory manner, while saving time and money for all parties concerned.  Mediation is not always an easy process, but it is highly successful, cost effective and can resolve disputes in a matter of days, instead of years. 

If anyone is interested in joining one or more of these webinars, please email Chris at chris@chrisfick.co.za.