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Misconceptions about conveyancers

1 April 2004

A sentence in the article - Estate agents laughing all the way to the bank - caught my eye. It reads, " Conveyancers and legal bodies charge about 10% of the value of the property, giving them between R15 billion and R18 billion a year in fees". If that were the case even plumbers might consider turning to conveyancing. Facetiousness aside, the sentence highlights the generally held view that conveyancing attorneys get paid too much for what they do. The facts indicate otherwise.

An efficient land registration system is critical for the economic development and political stability of any country. And in South Africa as in many other countries, it is the conveyancer, not the estate agent, who is at the centre of this system. It is the conveyancer who ultimately has the legal responsibility of ensuring that one's title is sound. To this end, in addition to having studied law and being admitted as an attorney, the conveyancing examination syllabus issued by the Law Society of South Africa requires a broad knowledge of some forty Acts such as the Companies Act and the Administration of Estates Act. All of which amounts to many years of studying.

The conveyancer drafts not only deeds office documents but also sale agreements, deeds of donation and loan agreements. It is also his responsibility to superintend and control the finances of a transaction. The conveyancer therefore has to ensure that:

  • The purchase price is paid.
  • Transfer duty, VAT, rates and other local authority charges are collected.
  • A mortgage bond, if necessary, is registered.
All this means that the conveyancer has to have an efficient accounting system to ensure that none of the parties to the transaction loses interest. Since the risks are high conveyancers have to have expensive professional indemnity insurance cover. This brings me to the misconception that conveyancing fees are high. Some people think that the revenue collected for Sars, the deeds office, local authorities and the body corporate in sectional title schemes are fees due to the conveyancer.

A statement like, "I sold my house and the attorney got (insert the entire amount reflected in the pro forma account)" is not uncommon. Conveyancing fees to the attorney in fact constitute about 1% of the transaction. They could be a lot higher if for instance title insurance had to be taken out, as is the case in the United States. It is the estate agent's commission and transfer duty which makes the transfer of property so expensive. This table and pie chart gives an idea.

The attorney's profession is regulated by the Law Society and high ethical standards have been laid down to ensure the public is protected. Another misconception is that conveyancing software is so powerful today that a highly trained competent legal secretary using it could in effect replace the attorney. The massive advantages and cost savings which conveyancing software has brought to the conveyancing profession must not be confused with the practice of law and its attendant complexities. Which is ultimately what a conveyancing transaction is. This brings me to a final point - that is the planned introduction of an electronic deeds registration system. Here the role of qualified conveyancers will be more vital than ever in ensuring the integrity of our land registration system.

In conclusion. The role of the attorney in the transfer of property is easily defensible and conveyancing attorneys should educate their clients in this regard to dispel any misconceptions that may linger.

Reader Comments: 6
Chris Fick 01/04/2004:

We must also not forget about the commission which the Estate Agent may receive from the financial institution for introducing the bond application.

Sarah 01/04/2004:

Well done to a fantastic article. I also think it is time the public are brought up to speed with the time, effort and work that goes into being a conveyancer.

Nishani Pather 02/04/2004:

Estate Agents that earns such high commission do very little to see the matter to finality. Most agents include transfer costs to the purchase price but fail to inform the purchaser that transfer duty has to be paid upfront and a loan may have to be taken for this purpose and he may be liable for interest and administration costs. The conveyancer is left with this burden to explain this to the purchaser. It is obvious that any costs incurred by the conveyancer in obtaining the loan is not transfer costs and the purchaser should be liable for a nominal fee. Transfer costs is the costs for preparing documents and consultation for signing together with attendance at the Deeds office. It certainly does not include the costs for the attorney obtaining the electrical certifcate, the costs for obtaining a loan for the purchaser where his transfer costs has been included in his bond, the costs for arranging occupational interest. This should be done by the agent who earns high commissions. If conveyancers do it that should charge for it and the parties should be advised of same by the agent. Agents should refrain from doing 'all that is necessary to sell the property." They should do all that is necessary to ensure the sale and transfer of the property.

Anonymous 23/04/2004:

It is a joke for us conveyancers to see what an estate agent earns per transaction. He does not accept any liability, and always blames the attorney if something goes wrong. Meanwhile the estate agent, some without any qualifications, sign the offer to purchase, the basis of all transaction with the purchaser and seller. This document rarely is complete and there are always problems regarding the various parties. Who has to sort it out? Us attorneys. We make all the calls and write all the letters, for a mere R250 to R350 postage and petties. Meanwhile the estate agents sit back and earn a hell of a commission and complain about the attorneys not doing their work. Also, a lot of the estate agents even receive a further cash incentive from attorneys, of up to 35% of the attorneys admitted fee. Who is the one supposed to be laughing?

lx 29/04/2004:

Along the lines of the saying: a marriage always has three sides: his, hers and then the truth - one surely could colour this topic to the extent of having the look of a Rubic's cube. Perusing the article and related comments it almost seems as if members of the conveyancing fraternity are attacking in defence here. Why are the estate agents so quiet? Could it be that a war was declared, yet the enemy (estate agents) hasn't turned up? Or are they too busy spending the money they received for work apparently not done properly?

Maybe they are too busy creating job opportunities / jobs for the poor conveyancers? At face value, it must be admitted that the initial article testifies of a well learned and groomed author, though the comparison with the plumbing profession tend to leave the smell of a blocked drain. Noteworthy is that defenders of the protected conveyancing profession without exception always refer to the importance of an accurate, secured registration system and the level of difficulty of the admittance exam. As for the admittance exam, one should refrain from making the common mistake too many brides and grooms make at the wedding day: passing that one little hurdle is only the alpha - the omega and the hellroad between the alpha and omega are still to come.

Furthermore, one should not forget that the registration system also entails yet another roleplayer: the deeds registry and its personnel. Ensuring the maintaining of an efficient and accurate registration system is in the final instance the responsibility of the registrar of deeds, registering the transactions. Until registration has been completed, regardless of the efforts and responsibilities of the preparing conveyancer, as a general rule no real rights have been transferred, as provided by the Deeds Registries Act 47 of 1937. It is admitted that by virtue of the same legislation the preparing conveyancer does bear most of the legal responsibilities.

However, typical of the law: the balancing of the scales is ever present - the responsibility of the registrar of deeds is just as crucial - taking cognizance of the provisions of section 99 of the said Act. One tends to ponder the required level of qualification and expertise of the registrar of deeds (deeds examiners), having the responsibility to verify the correctness and registrability of deeds prepared and lodged by such highly qualified and skilled conveyancers?

Based on close observation I conclude with the following final thoughts:
* Recently a number of shocking incidents of bribary were disclosed by the printed media (newspapers). In all incidents the spotlight fell on the deeds registry employees. Surely someone initiated the embarrassment? Could it be the estate agents bribing the officials? They don't even complete all the initial documentation fully, according to one of the comments - thus, it is to doubt that they could be the culprits...

* If the majority of conveyancers succeeded in maintaining such an efficient, accurate registration system, why does it take so long to get a transaction registered? Why is money wasted on employing officials to verify the correctness of deeds? If conveyancers were so blameless, why is it so often necessary for the client to sign an application to rectify a mistake in registration, eg. the name of the owner is incorrectly reflected in the title of the house, or the identity number is incorrect etc?

* If the conveyancing profession is such a loss and financially almost detrimental to a law firm, why are there so many conveyancers and so few plumbers and why are conveyancers always defending the profession?

* Perhaps, as it proved to be such a problematic issue, consideration should be paid to the possibility of a third dog walking away with the bone: nationalizing the conveyancing profession - government could surely create quite a number of jobs! Nationalizing the profession would also not be too extreme if the electronic registration system materializes.

Jenny Dugmore 22/05/2004:

I run an estate agency (having spent 20 years running corporate IT companies) and agree that the rates charged by conveyancers are inordinately low and in my opinion not relative to either the expertise or level of involvement required.

On the other hand, I have been really surprised to establish that estate agents do in fact warrant the fees that we charge. The incredible 24X7 demand on my agents and their willingness to be involved in every aspect of the deal has really been an eye opener.

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