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1. The Role of the Conveyancing Attorney
A conveyancing attorney in South Africa is a specialized lawyer responsible for transferring property ownership from the seller to the buyer. One of their key duties is to handle the buyer’s deposit securely.
2. What Happens to the Deposit?
Once the buyer pays the deposit (usually required in cash), the conveyancing attorney places it in a trust account. This account is strictly regulated to ensure the money is protected.
- Standard Trust Account: If no special request is made, the deposit sits in a general trust account, where it does not earn interest for the buyer.
- Interest-Bearing Trust Account: If the buyer requests it, the attorney will place the deposit in a separate interest-bearing trust account under Section 86(4) of the Legal Practice Act. The buyer earns interest, but the attorney may deduct an admin fee.
3. When is the Deposit Used?
The deposit is typically used to help pay the purchase price when the transfer is completed at the Deeds Office. The attorney ensures that all financial obligations, such as bond registration and transfer fees, are settled before releasing the funds.
4. What If the Sale Falls Through?
- If a Suspensive Condition is Not Met: A sale agreement may include conditions (e.g., the buyer must secure financing). If the buyer cannot meet these conditions, they usually get a full refund of their deposit.
- If the Buyer Breaches the Agreement: If the buyer fails to fulfill their obligations (e.g., pulling out without cause), the seller may claim the deposit as damages, depending on the terms of the sale agreement.
- If the Seller is at Fault: If the seller cancels unlawfully, the deposit is refunded to the buyer.
5. Legal Protections & Regulations
- Legal Practice Council Rules: Attorneys must follow strict rules regarding trust funds. Misuse of funds can lead to severe penalties, including disbarment.
- Fidelity Fund Protection: The Legal Practitioners’ Fidelity Fund offers protection if an attorney mishandles a trust deposit.
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