What does an approval mean in relation to buying property in South Africa?

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Here’s a detailed breakdown of what “approval” means at various stages of the property buying process in South Africa, with a special focus on bond approval and other types of approvals involved.

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🔑 1. Bond (Home Loan) Approval

This is the most critical approval for most buyers.

💼 What It Is:

When a buyer applies for a home loan from a bank, the bank reviews:

• Income and employment history
• Credit record and affordability
• Existing debts
• Deposit available

The bank may:

• Approve the full amount requested
• Approve partially (e.g. 80% loan, 20% deposit needed)
• Decline the application

📝 Process:

1. Offer to Purchase (OTP) is signed.
2. Buyer applies for a bond with one or more banks.
3. The bank sends out a valuer to assess the property.
4. Bank gives bond approval in principle, subject to valuation.
5. Final bond approval is issued with terms and conditions.
6. The buyer signs bond documents at a bond attorney’s office.

🕒 Timeline:

• Typically takes 5–10 working days after application.
• Some OTPs include a deadline (e.g. “bond approval within 21 days”).

🧩 Tip:

Using a bond originator (like ooba or BetterBond) can help buyers compare offers from multiple banks.

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📄 2. Offer to Purchase (OTP) Approval and Suspensive Conditions

The OTP is a legally binding agreement between the buyer and seller. It often includes suspensive conditions—conditions that must be met before the sale is final.

Common Suspensive Conditions:

• Bond approval
• Sale of another property (if the buyer needs to sell first)
• Deposit payment within a set time
• Building plan approvals (for sectional title units or developments)

If the buyer doesn’t meet these conditions in time, the OTP becomes null and void, and no sale occurs.

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⚖️ 3. Attorney and Regulatory Approvals

A property transaction involves three sets of attorneys:

1. Transferring attorney – handles change of ownership.
2. Bond attorney – registers the new bond.
3. Cancellation attorney – cancels the seller’s existing bond (if any).

All parties must ensure:

• FICA compliance (proof of ID and address)
• Municipal rates and taxes clearance certificate is issued
• Levy clearance certificate for sectional titles
• Transfer duty (a tax paid by buyer) is paid to SARS
• Approval from SARS to proceed with registration

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🌍 4. Government / Regulatory Body Approvals (Special Cases)

These are not routine, but apply in specific scenarios:

For Foreign Buyers:

• May need South African Reserve Bank (SARB) approval if foreign funds are involved.

For Agricultural or Rural Land:

• Might require permission from the Department of Agriculture or Land Affairs.

For Development or Subdivision:

• Zoning changes, environmental approvals, and building plan approvals may be needed from the local municipality.

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🏁 Final Step: Registration at the Deeds Office

After all approvals are in place, the attorneys submit documents to the Deeds Office for property registration.

• The buyer becomes the official owner.
• The bank (if there’s a bond) registers their interest.
• The seller gets paid from the buyer’s funds or bond.

This process usually takes 6–12 weeks from the date the OTP is signed.

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✅ Summary Table of Approvals

Type of Approval	Who Needs It	Purpose	Common or Rare
Bond (Home Loan)	Buyer	Finance the property	Common
Suspensive Conditions	Buyer/Seller	Makes OTP conditional	Common
FICA Compliance	Buyer & Seller	Legal requirement to prevent money laundering	Common
Municipal Clearance	Seller	Settle outstanding municipal fees	Common
SARS Transfer Duty	Buyer	Pay transfer taxes	Common
SARB Approval	Foreign Buyer	Move funds into/out of SA	Case-by-case
Agricultural/Zoning	Buyer/Developer	Comply with land use laws	Rare/Special

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