What are the risks involved in the informal buying of an RDP house, and how can I ensure that the house is correctly registered and transferred?

The long answer

Thank you for your email asking about the risks involved in the informal buying of an RDP house, and how to ensure that the house your domestic worker Elizabeth wants to buy is correctly registered and transferred into her name.

It is true that informal cash sales of RDP houses are risky: often the only document that indicates that a house has been bought is an affidavit, signed by both seller and buyer, and witnessed by the local street committee. It is not clear how much weight this affidavit would carry in court, if a third party emerged and claimed to have bought the house from the seller.

The problem is that the formal system involves a great deal of administrative effort, time and cost, so that the informal cash sale is much more attractive to the seller: the seller gets the cash quickly, does not assume the administrative burden of formalising the sale, and all the risk is carried by the buyer.

Informal cash sales also prevent future buyers and sellers from formal transactions, so the problem is compounded. Again, if Elizabeth wanted to use the house as collateral, the title deeds would need to be in her name.

The formal market is made even more burdensome by the backlog in issuing title deeds for houses and lengthy administrative delays.     

Perhaps the first thing to check is that there is a title deed for the house that Elizabeth is interested in, given that the title deed is the only legal proof of ownership. If the title deed was lost or destroyed, a copy in the form of a computer printout can be obtained from the Deeds Office. In that case you would need to go in person to the information desk at your nearest Deeds Office and fill out the prescribed form. They will only give out this information if you have the full names and / or ID number of the owner of the property, or at least their date of birth. You would also need the correct erf number and township or farm name and number, not the street address. You would pay about R14 for them to do this data search which should take about 30 to 60 minutes.

You can also do an online search for the title deed via DeedsWeb, which is a national government website.

If there is a title deed in the seller’s name, a conveyancing attorney would be needed to transfer the title deed into Elizabeth’s name, and have it signed into her name by the Registrar of Deeds and a copy filed in the Deeds Office. The conveyancing fee could be around R7 680 (also an obstacle for poor people).

It’s obviously more of a problem if the seller never received the title deed in the first place, which has been the case for many RDP house beneficiaries. This seems to have happened when the developers were allowed to go ahead with building the houses before they had registered the deeds, and in many cases they simply didn’t bother to register the deeds as this represented a small amount of money compared to the much larger amount for the building work. This meant that the work of registering the deeds fell to the municipalities to do, and often they didn’t have the budget, the staff or the know how to register all the properties. This is why there is such a large backlog of title deeds for RDP houses.  

You could contact the Housing Enquiries of the Department of Human Settlements at the toll free Customer service hotline: 0800 146 873 / 012 421 1915.

You could also ask advice from the Transaction Support Centre (TSC) which was set up in 2018 under the auspices of the Centre for Affordable Housing Finance in Africa (CAHF) and 71point4.com. CAHF is based in Johannesburg (+27 (0) 11 447 9581) and the TSC is based in Khayelitsha.

The TSC has done a lot of research into informal RDP house sales in Khayelitsha since 2018, and it exists to assist people to enter the formal market when buying and selling RDP houses. You could contact their legal advisor, Lisa, on 083 750 7559 (lisa@71point4.com).

If you find that the owner never had a title deed for the house, you could bring an application to the high court to ask for a declaratory order that the house be transferred into Elizabeth’s name.