Choose your conveyancer with caution. "Trust me, I am a lawyer." (Familiar slogan.)
Property buyers and sellers will be pleased to hear that South Africa is now officially the most affordable country in the world to buy a house. We are just ahead of the USA and Bahrain with this finding. It is wonderful to be a world leader for once on the economic front. Feel free to check out BestBrokers' analysis of housing affordability in the 62 countries that were part of their study to see how unaffordable property is in many other countries around the world. This is of course positive for the South African property market. It is also a good time to remind sellers that it is not just about getting a good offer price for your house. It is just as important to ensure that you choose the right conveyancer to handle the transfer of your house for you. A recent case in the high court regarding theft by a dishonest lawyer serves as a serious warning for everyone again.
A fugitive conveyancer steals R4.25 million. Here, the buyer purchased a house at an auction for R4.1 million. The buyer paid the required deposit of 5% as well as the auctioneer's commission to the auctioneer. The auctioneer, in turn, transferred the deposit to the seller's nominated conveyancer. The conveyancer transferred the deposit to the seller. The conveyancer issued a pro forma invoice to the buyer for the balance of the purchase price and the transfer costs of R4.25 million. The buyer paid this amount to the conveyancer's nominated bank account, as specified in the invoice. Conveyancers are legally obliged to keep these property funds in a trust account for safekeeping. In this case, it turned out (after the buyer inquired about the endless delays with the transfer process) that the bank account specified in the conveyancer's invoice was not the case at all and a trust account was not. It became further clear that she had fled with these funds. The parties were now in dispute with each other. The buyer claimed that the house should have been transferred to him because he had overpaid the full purchase price along with all costs. The seller, on the other hand, argued that the sale agreement had been cancelled because the buyer did not 'secure' the payment of the balance of the purchase price by paying it into a trust account. The seller learned a hard lesson. The High Court had to determine who should ultimately bear the loss. The court found that the buyer had performed fully and had done everything that the sale conditions required of him when he paid the conveyancer's final invoice. The buyer was entitled to the transfer of the property. It was not the buyer's responsibility to ensure that payment was made into a trust account. The buyer was also under no obligation to monitor the overpaid funds until the transfer or not.
The seller's conveyancer was indeed legally obligated to keep the funds in her trust account safe until the transfer took place. The consequence is that the seller now has to transfer the property to the buyer and attempt to recover his losses elsewhere. He can certainly file a claim for reimbursement and damages against his missing conveyancer (not a good prospect), and as a last resort, he can submit a claim to the Fidelity Fund for Legal Practitioners (LPFF). Of course, he will wish that he had avoided the loss of millions of rand, the costs, the delays, the stress, and the risks by appointing a reliable conveyancer from the start. (The conveyancer is legally suspended and may not practice further. Her firm has been placed under curatorship. According to her, the total shortfall of at least R8 million in her trust account is due to an dishonest bookkeeper she had appointed.) Remember: as a seller, you have the right to choose your own conveyancer when you sell your own property. Make an informed choice and appoint your trusted conveyancer to handle your property transfer for you. Do not sign anything before an attorney have carefully reviewed your agreement for you.
