And
you can count on there being a stack more. Sit
down with your Bank Consultant and go through
stages and forms from start to finish otherwise
you will find yourself slipping and sliding on
paper work and red tape, running hither and thither
trying to collect, fill in, keep up with, copy
and deliver forms that generally only the very
privileged in very high places appear to know
how, what and when these endless forms and in
what order they require your attention.
Choose
your Bond Rate and Loan Term. Deposit: 10% or
MORE and interest. The more cash you make available
as a deposit on the amount you want to borrow
the better for you. The more money you owe the
Bank the higher the Bond and the longer it will
take to pay off and the tighter the noose will
feel around your neck...
A
Bank inspector will be sent to the plot to ensure
that it is adequate security for the loan amount.
This scrutiny fee is payable by you when and if
you take on the bond when it is offered. If the
plot is fully paid and registered in your name
at the time of applying for the bond then the
value of the plot would usually serve as your
deposit.
It
is not possible to buy property without a handy
amount of cash available so forget that fantasy
here and now. A substantial deposit is always
asked for and when an OFFER TO PURCHASE is accepted
the buyer usually has to put down a minimum deposit
of 10 percent of the purchase price.
The
buyer will also have to pay attorneys fees, transfer
duty, bond registration costs, interim interest,
inspection fees, insurance and the rates still
owing for the year on the property if not yet
paid up and a whole lot more steel-sprung charges
waiting to hit you between the eyes and will have
you on your knees in no time at all stay on top
of your paper work.
All
costs such as deposit, bond and registration costs
are required up-front. Once the bond is approved
the Banks conveyancers prepare the documents and
register the bond at the Deeds Office.
THE
BOND REPAYMENT
You will be paying INTEREST on the amount borrowed
AND REPAYMENT of the ACTUAL amount borrowed. In
the initial years installments are used up mostly
in the paying off of interest. Much, much, much,
much later a more substantial percentage goes
toward repaying the actual loan. Keeping your
bond as low as possible will so to also keep interest
low which means you can pay your home off quicker.
The bank will typically store the Deeds of Transfer
of the property in its safe-keeping until the
bond is paid up and there is an annual fee for
storing the Deed, a trifling amount although one
which sticks in one's gullet considering the monumental
amount you actually will be owing the Bank and
you would have thought that they could have over-looked
this one! The buyer may be given a copy of the
deed of transfer concerning the property. After
Transfer of Ownership has been registered, the
Deeds Office issues the official Deed Of Transfer
to you as the new owner but in favour of the Bank
in the event you backfire in making the repayments.
PROGRESS
PAYMENTS
Progress
Payments are calculated so that adequate funds
are held in reserve by the Bank in order to complete
the new home. Never and not even in a blue moon
will a Bank hand the full loan amount to you and
wish you well and may all your dreams come true
as would be a nice case scenario for sure. What
does in fact happen in the harsh and real world
is that the Builder will get under way and get
the building up to a certain level or stage of
COMPLETED WORK (hopefully you have done your homework
and asked the Bank exactly what level of work
should be completed before first payment). He
will then expect payment for his work done. You
will then request from the bank your FIRST PROGRESS
PAYMENT. An inspector or evaluator from the Bank
will drive out to your site and scrutinize work
that has been done and to what extent and he,
in his mind-boggling wisdom will estimate that
enough FINISHED WORK has been done for him to
issue your FIRST PROGRESS PAYMENT and so it will
go to and fro...
If
your progress payment request is greater than
the amount of work done the Bank will only pay
the evaluators estimated amount which could make
him a very unpopular man indeed. However be that
as it may the Bank will require in most instances
the original signed and completed progress payment
request form at least five working days prior
to the date of expected payment.
There
are usually several Progress Payments that are
made during the contract before your house is
complete. Work through a progress schedule so
you, the Bank and the Building Contractor know
exactly what work must be completed before next
progress payment is due. Get this in writing from
the Bank. Progress Payments are one of the biggest
headaches you will encounter throughout the building
process if you are not well-informed. And TAKE
NOTE: Boundary Walls have no value during a build
as far as the Bank is concerned.
You
are also legally liable for payment of the work
carried out by your Builder. And he can take you
all the way to court if you do not pay him the
amount he requests for work he has done on site.
And
for further red tape at various stages throughout
the build you will have to get an inspector from
various departments and expertise to sign off
work done and to a level of satisfaction such
as foundations, engineers and so on. All sign-offs
and copies of sign-offs kept for safe-keeping
as you will find someone somewhere will want a
copy of some form that someone signed somewhere
during the project. GET FILES and then get a cabinet
for the files as you will certainly end up with
enough paperwork to pack a cabinet quite solidly.
Just
to re-iterate -Progress Payments are made for
COMPLETED work only. Something very large and
heavy could hit the fan by which the Bank inspector
will not authorize another payment or reimburse
you until work is actually finished and there
you are battling because you don't have enough
funds to complete the work because of a cock-up
somewhere between you and the builder and perhaps
the Bank themselves. A most exasperating situation
I can assure you.
Ensure
and I cannot emphasize this more, each of the
Progress Payments must cover a specific amount
of work in total and perhaps a little more but
never less. Utilize as much of your own cash in
the beginning as you possibly can.
INTERIM
INTEREST, FORMS, BUILDERS LIEN AND PRIME COST
ITEMS
Is payable on progress payments in addition to
your loan. Ask your Bank consultant about INTERIM
INTEREST so you know what is coming. You could
very well find yourself having the biggest shortfall
of your life as interest on progress payments
sneaks up and kicks you right in the butt at the
end of a backbreaking build where funds are just
not available to complete the home.
As
the final progress payment becomes due the builder
will require his last payment. You must then inspect
the home and ensure that the completed home is
finished to your entire satisfaction. Turn on
all things that turn on, flush all things that
flush, open and shut things that open and shut,
check all doors have their keys and are turning
and locking properly. In other words do a TEST
RUN on the home. Check nothing is broken or damaged
and even missing completely. And if you want to
go above and beyond spray water over your roof
and down the walls and around the windows in case
of any leaks which you will otherwise only notice
one very dark and lonely night when there is a
huge thunderstorm. You will then sign a Letter
Of Satisfaction advising the Bank that you are
satisfied with the completed home. You will also
sign a CERTIFICATE OF OCCUPANCY which is obtained
from the local authority. There is so much red
tape and paper work involved in building a home
that whole forests must have been felled in order
to keep up. Put your boots on, secure your false
teeth, buckle up its going to be the ride of your
life!!!!!
SPECIFICATION
DOCUMENTS - SCHEDULE OF FINISHES
The Bank will give you a Specification Document
which you will fill in which describes lists of
items of finishes and their values to be used
in building the home, such as type of brick for
exterior, type of roofing tiles, type of windows
and doors and so on and their estimated cost.
If you are not one hundred percent sure about
these costs a quantity surveyor will come in handy
here although he comes with his own cost! Do not
suck guestimate amounts out your thumb as the
Bank will have their own costing department and
they will question your figures in no uncertain
terms and normally their figures are literally
to the bone. Add 25% to your total cost.
BUILDER'S
LIEN AND BUILDER'S WAIVER OF LIEN
Your Building Contractor automatically has a "lien"
over your property. A rather inexplicable way
of saying he has ownership of the property until
he has been paid in full for his work on site.
Unless of course you have a Bond/Loan with the
Bank. They will require the Building Contractor
to sign a Waiver Of His Lien over to them. They
will then have ownership of the property if you
misfire on repayments.
PRIME
COST ITEMS - P C I
Prime
Cost Items are the last essentials in a home such
as fitted stoves, ovens, light fittings etc.,
that YOU can choose for finishes and the last
remaining amount that is allowed for in the contract.
Clarify from your Builder and Bank about PRIME
COST ITEMS and how much they have allowed for.
HOME
AND TYPE - THE PLOT
Finding
The Right Plot
Inspect the plot to define the boundaries. Record
all physical features of the plot such as trees,
shrubs and so on. Look out for the best view possible
from the site and whether this view will always
remain the best view if you are buying into an
un-built up area. A good view and privacy should
be a deciding factor on home placement on site.
If you wish to keep any trees or shrubs or feature
on site then these must be pointed out to the
Builder and even marked.
Size
does in fact matter if you are building a large
home and you like garden space with lots of outdoor
living. A plot of 900 square meters is small by
standards and would put your neighbors on your
doorstep. A plot of 1200 square meters upwards
will give you more breathing space. Larger plots
will cost more to wall or fence. Plots that are
higher up have better views but can be battered
by gale force winds, particularly coastal areas.
Weather factors must be taken into consideration
(especially by the sea and on elevated sites).
Main entertainment areas, large windows and entrance
doorways should be protected from wind and rain.
Make an effort to shelter these areas when planning
the home and ask the locals about the weather
patterns in the area. The best shape of a plot
is either square or rectangular. Steep plots will
be expensive to build on. A great deal of time
and money will be exhausted on retaining blocks,
re-inforcing, earthmoving equipment, piling and
access predicaments for delivery of bricks etc.
Time wasted in running wheelbarrows with bricks
etc. down to site.
Discover
if there are any servitudes (an underground or
above ground municipal works etc. or public access
road or path) on the plot such as drains, sewerage
pipelines, water mains etc. You cannot build over
a servitude, therefore building a boundary wall
over these servitudes might cause a dispute further
on down the line as council workmen come onto
your property (as they have the right) to service
the pipes and also digging up your garden and
they don't have to restore your gardens former
glory either!
Get as much information about the neighbours on
all sides of your plot and what will be going
up next door or what is there already. You could
have issues of privacy, blocking of views, encroachment,
noise and so on. Do they have dogs that could
become a problem to your family and your own animals.
Do they have spoilt brats that lark about in the
street. Many land buyers don't even look at the
neighbors when buying land and yet an offensive
or disagreeable neighbor can be worse than any
servitude and make your life and the life of your
family very stressful. When push comes to shove
you might have to move. Ask the Agent who and
what lives next door and if possible get to meet
them.
Visit
the plot at all hours of the day. Check on the
traffic and crime. Establish if there are any
building restrictions in the area. In some instances
there can be restrictions of home size and height,
roofing, paint colour, animals, plants and so
on.
YOUR
AGENT - BOUNDARY PEGS AND OFFER TO PURCHASE
Once you have selected your plot, have the Estate
Agent clarify from the Municipality that all services
have been installed. You should have water, electricity,
sewerage and telephone service connections. Make
sure the plot you have chosen corresponds with
any relevant numbers and any beacons or markers
such as roads, paths, street lights, municipal
drains etc. on the site map. Get an S.G. DRAWING
(Surveyor Generals Drawing).
Make
certain boundary pegs (typically metal poles)
are pointed out to you either by the owner, agent
or surveyor. The pegs are commonly located in
the ground marking boundary of the plot. However
they are not always visible above ground. The
pegs must be exposed to you without fail before
you sign the Offer To Purchase. A good idea is
to measure for yourself the distance between each
peg and confirm for yourself it is in fact the
size you are expecting as per the S.G. DRAWING.
After
you are satisfied an Offer To Purchase/Agreement
Of Sale/Deed Of Sale will be presented to you
by the Agent. The Agent will get a commission
from the sale and paid for by the seller. In most
Offer To Purchase documents the words: (sold voetstoots)
meaning AS IS is written into the document and
also means there is no guarantee by the seller
that the property is without faults visible or
not. Other clauses can be the sale is subject
to the sale of the purchasers property. A description
of the property to be sold, the plot (erf) number,
the selling price and the date by which it must
be sold must be shown on the document.
If you are taking a Loan from the Bank, this should
be included in the Offer To Purchase as a suspensive
condition where the sale is subject to receiving
financial assistance if you haven't already approached
a Bank and put this down in writing for example...
This
offer is subject to a bond/loan being granted
by Bank within a specific period, include all
dates from date of the "Offer To Purchase
Agreement."
Ensure
the person selling the plot is the legal owner
and the Title Deeds are registered in his name
and has the plot(erf) number, size etc. on the
Title Deed. You can offer LESS than the asking
price and if accepted the document is signed by
both seller and purchaser who agree to this. You
can add certain conditions into the Offer to Purchase,
such as a subject to: the plot being cleared and
you can also not accept any conditions set by
the seller on this Offer To Purchase but this
must be acknowledged and approved by both Seller
and Purchaser. Once the Offer To Purchase is signed
by Seller and Purchaser it becomes a valid, legal
and binding contract. If you are in any doubt
about any sections of this contract seek legal
advice before signing.
The
Deed Of Sale is handed to the appointed conveyancer
(normally appointed by the Seller) and he will
draw up the necessary documents. Both the Seller
and the Purchaser will be required to sign the
necessary documents. There are numerous costs
involved and one would be well advised to make
sure you are aware of them all and in what order.
MINIMUM
REQUIREMENTS IN A HOME
You
can work on an average of paying R4 000 - R6 000
per square meter to build an average new home
as at June 2010.
There
are many different ways of building a home and
one should look at studying these by taking examples
from pictures and put together special features
you like and come up with your own PERSONAL STYLE.
I honestly do not believe that one can (in these
modern days) choose a particular style of home
for example VICTORIAN or BALI and reckon it will
suit the family and look wonderful against an
AFRICAN SKY. These fancy names are used by Estate
Agents and developers but in truth some of those
houses do not even vaguely resemble the authentic
style they mention. It would be in your best interests
to gather up a selection of photos of specific
elements of other homes you have liked and then
work these into your own home. Bearing in mind
you want to come up with something that is attractive
and have a good re-sale value further on down
the line. It is absolutely ESSENTIAL to get your
home designed into 3dimension reality BEFORE the
build so you can see exactly what it will look
and feel like before it is even built.
Building
a single or double storey will depend upon your
requirements. A single storey will not necessarily
be the cheaper choice. A lot will depend upon
the position, gradient of the plot, shape of the
home, finishes, plaster or face brick, flat or
timber roof and so on.
PEOPLE
INVOLVED IN THE BUILDING AND SWIMMING POOLS
You will have to get plans drawn up and passed
to build a permanent swimming pool by your local
authority. The plans will show the exact position
of the pool and any existing buildings, pipes
or cables and be a certain distance from these.
Regulation fencing will have to be built around
the pool for safety as required by most municipal
laws.
PEOPLE
INVOLVED - BUILDING PLANS AND ARCHITECTS
Fees charged by architects are prescribed by the
South African Council For Architects. Ask for
a complete run-down on his costs in total and
for what service he will be providing you with.
Architects
design plans for buildings. He completes your
new home plan with all the requirements needed
for the Building Contractor, the Municipality
and so on. The Architectural drawings depict different
views of your home facing North, South, East and
West elevations. The floor plan illustrates the
interior walls and rooms including layout of driveway,
boundary walls, roofs, piping etc.
Various
people involved in the building process will require
a plan of the new building. Ask your architect
what the distribution is of plans and how many
copies are needed and then some.
When
you visit your Architect for the first time take
along some floor plan ideas of your own and plans
you have seen that you like with measurements
of each room within the floor plan and an overall
size of the home.
Use your present house or flat as a guide for
area measurements. Simply saying vaguely you want
an average 3 bed roomed, two bath roomed home
is not a good indication of size, family requirements
and budget allowance. Areas such as the kitchen
might need more space to add on a breakfast nook
and thereby not requiring a full-sized dining
room making more space for the lounge. Take along
pictures you have seen in magazines of other houses
you have seen and liked, even if it is just some
part of them. Also consider your entire family
when you design your new home.
Do
not hesitate to ask him to re-design certain aspects
of the plan in the intermediate stages if you
are not happy with it. Ask to see other homes
he has designed and what building contractors
and sub contractors he recommends. Make the most
of your local municipality for their input on
reliable and registered builders, architects,
plumbers etc. in your area.
BUILDING
OPTIONS
Submit your architectural detailed drawings, specifications
and construction specs with the address of site
and positioning of the home to various registered
builders of choice for Tender. In the best case
scenario he will be tendering a FULL CONTRACT
for the entire build with a PROJECT MANAGER to
report to.
The
Building Contractor will give you a cost breakdown
of the project. Every detail and cost involved
from start to finish should be within his tender
from materials to labour.
BUILDING
REGULATIONS AND SAFETY
There are building and safety regulations pertaining
to heights of walls interior and exterior, garage
walls and doors that lead into the home, firewalls
and doors. These must be adhered to or it could
cost you at sign-off. Find out from the authorities
the regulations for your region and get a copy
of this.
THE
BUILDER AND THE CONTRACT
A FULL CONTRACT with the Builder should include:
He must pay his employees on due date to avoid
strikes and slow work that will suddenly hit a
brick wall and grind to a halt. He should have
his own insurance cover for theft and breakage
of his machinery and tools. Make sure you are
not responsible for this bearing in mind of course
the security of your site and theft will run its
course if there is no security in particular during
the night and in this day and age this is not
a guarantee that what is in place will still be
there in the morning. Get clarification in Builders
Contract regarding security otherwise it will
become an issue, I have yet to come across a single
build whereby theft didn't occur.
The
Builder will SUB-CONTRACT specific work such as
roofing, electrical and plumbing and so on. The
Building Contractor is responsible for their workmanship.
If YOU get in a sub-contractor to do work then
YOU will be responsible for work done and cannot
hold the Building Contractor liable for quality
of work, damages and so on.
Never
ask the builder to estimate the cost of the project.
A complete and written quote is what you require
from him. The final figure on the quote in total
is what you will be liable for and not a cent
more unless an act of God causes unforeseen damage
that neither of you anticipated.
It
is never a good option to choose the cheapest
tender, the low cost might indicate a lack of
savvy or desperation due to previous sub-standard
workmanship. You can then bet he will cut so many
corners your will be left with a building that
has no end (mainly because you will be spending
every last cent you have fixing up the mess the
Builder left for you). All Builders should have
examples of other homes or building they have
completed and it is in your own interest to go
and see these buildings and speak to people who
own them. Spend some time with each Builder preferably
out on site discussing the project and how they
will be approaching it. You and your Builder will
be spending much time together so make sure you
can get on with the man on a daily basis for months
on end and that he is willing to put his money
where his mouth is.
It
is a good idea to COST THE JOB yourself or take
it to a quantity surveyor then you will have an
idea of what costs are involved.
A
contract between you and the builder can then
be drawn up and conditions put down by each party.
Your attorney should be able to advise you on
contract details here. The contract is a valid,
legal and binding document once you and the building
contractor have signed it. Subjective witnesses
must be present when this is signed. Here I would
go with your attorney in the event of a difference
of opinion later on. The Bank will not be involved
with the Builder and cannot be held responsible
for any work done by the Builder. Ensure the Building
Contractor is registered with the National Home
Builders Registration Council. NHBRC. Ensure the
Builder is not black-listed by the Bank BEFORE
you sign the contract.
THE
NHBRC AND THE BUILDER
The
NHBRC protects the owner who builds a new home.
They will ensure that work carried out in the
construction of the new home is of a high quality
and workmanship.
Building
contractors must register with the NHBRC and maintain
this registration every year. If your builder
is not registered with the NHBRC and has never
been registered and he claims to have been building
houses for 20 odd years be on your guard and stay
alert.
There
are a few Builders out there that appear to be
the most delightfully witty and agreeable people
on the face of the earth BEFORE they get the job
but AFTER they have been awarded the job they
turn into absentee trolls who will cost you a
huge amount of money while they play their dodge-em
games with you. Some might even be building two
or three other homes at the same time which you
knew nothing about and using YOUR items to finish
OTHER jobs and YES it has indeed happened.
YOUR
VERY WORST CASE SCENARIO
