What is a cash purchase?
A cash purchase of property is a purchase in which the buyer pays the full purchase price from their own funds, without taking out a new mortgage bond from a bank. The term is slightly misleading — nobody pays millions of rand in physical banknotes — but it captures the essential point: no new home loan, no new mortgage bond, no bond registration attorney, and no lender in the chain.
The source of the buyer’s funds in a cash purchase is almost always one of four: savings accumulated over time in a bank account or investment portfolio; the proceeds of sale of an existing property (a “like-for-like” swap where the net cash from one sale funds the next purchase); an inheritance; or offshore funds imported through an authorised dealer bank. A smaller number of buyers combine a partial bond with a large cash deposit, or use bridging finance to cover a brief gap between sale and purchase — we address those mixed cases below.
A cash purchase does not mean the buyer pays the seller directly. The purchase price is still paid into the transferring attorney’s trust account under an invested mandate (usually under section 86(4) of the Legal Practice Act 28 of 2014, which allows trust funds to earn interest for the client’s benefit until registration). The money sits in trust during the transfer period and is paid to the seller on registration in the same way as bonded purchase funds would be.
Why cash transfers are faster
Removing the bond from a property transfer removes four discrete workstreams and the timing risks attached to each:
- No bond approval delay. A bonded purchase cannot proceed to lodgement until the buyer’s bond is granted — typically 5 to 10 working days after the OTP, but sometimes much longer where credit or valuation issues arise. A cash purchase runs the moment FICA is in and rates clearance is ordered.
- No bond attorney coordination. A bonded transfer involves three separate law firms (transferring, bond registration, bond cancellation on the seller side). A cash purchase has two at most (transferring, plus cancellation if the seller has a bond) — or just one if the seller is also cash-clean.
- No National Credit Act assessment. The buyer is not taking a new credit agreement, so the bank’s affordability, FICA and valuation steps under the National Credit Act 34 of 2005 do not arise.
- Simpler FICA in some respects. No need to reconcile bond grant letters against purchase price; no bank-side FICA layered on top of the conveyancer’s FICA. The source-of-funds enquiry itself is stricter (see below), but the number of separate FICA workflows is smaller.
- Fewer parties. Fewer firms means fewer signature appointments, fewer reconciliations, fewer moving parts. The marginal day saved on each handoff adds up.
Typical timeline
A clean cash purchase in Pretoria typically registers 6 to 8 weeks from signed OTP to registration, compared with 8 to 12 weeks for a comparable bonded purchase. The critical path is rates clearance, not financing — and rates clearance takes roughly the same time on a cash as on a bonded file. The savings come at the front end (no bond approval wait) and the back end (single-deed lodgement rather than three-deed batch).
| Profile | End-to-end | Critical path |
|---|---|---|
| Cash purchase, seller with no bond | 5 to 7 weeks | Rates clearance and transfer duty |
| Cash purchase, seller with existing bond | 6 to 8 weeks | Cancellation figures from seller’s bank |
| Bonded purchase (for comparison) | 8 to 12 weeks | Bond grant and three-way lodgement |
What you save vs what you spend
On a R2,000,000 cash purchase compared with a R2,000,000 bonded purchase, the buyer saves roughly R50,000 in direct conveyancing and bank costs — primarily the second LSSA-tariff fee for the bond attorney and the bank’s initiation fee. The rest of the cost statement is unchanged.
| Cost item (R2m purchase) | Cash purchase | Bonded purchase |
|---|---|---|
| Transfer duty to SARS | R33,786 | R33,786 |
| Conveyancing fee (transfer) incl. VAT | R40,963 | R40,963 |
| Bond registration fee incl. VAT | — saved | R40,963 |
| Deeds Office transfer fee | R1,738 | R1,738 |
| Deeds Office bond fee | — saved | R1,738 |
| Bank initiation fee (NCA cap) | — saved | R6,037 |
| FICA, postages & petties | R3,500 | R3,500 |
| Total buyer cash required | R79,987 | R128,725 |
The cash purchase saves roughly R48,738 against the bonded scenario — about 2.4% of the purchase price. Note: the cash buyer still needs the full R2,000,000 purchase price in cash on top of these fees; the bonded buyer only needs the fees and any deposit the bank required.
FICA source-of-funds for cash purchases
The Financial Intelligence Centre Act 38 of 2001 (FICA) makes every conveyancing attorney an accountable institution with a statutory duty to verify the identity, address and source of funds of every client before acting. On a bonded purchase the bank has already done much of the source-of-funds work as part of the credit application, and the conveyancer can rely on the bank’s grant letter as secondary evidence. On a cash purchase there is no bank in the chain — so the conveyancer’s enquiry stands alone and the threshold is higher.
Expect to be asked for the following, depending on the source of the funds:
- Savings. Bank statements covering the period in which the purchase funds accumulated (typically 6 to 12 months), showing consistent deposits from identifiable income sources. Large, unexplained lump-sum deposits must be individually substantiated.
- Sale of an existing property. A copy of the signed sale agreement for the source property, the conveyancer’s final statement of account, and the trust-to-trust transfer confirmation showing the proceeds moving from one transaction to the next.
- Inheritance. The Master’s Office letter of executorship, the liquidation and distribution account, and the executor’s certificate of transfer to the heir. Pure “family gift” transfers require a signed donations tax declaration and bank-statement evidence.
- Loan from a third party. A written loan agreement, bank statements showing the loan advance, and FICA on the lender. The National Credit Act may apply.
- Offshore funds. The MT103 SWIFT confirmation from the authorised dealer bank that imported the funds, plus exchange-control documentation where applicable.
A conveyancer who cannot reconcile the source of funds to the trust-account deposits is statutorily obliged to file a suspicious transaction report with the Financial Intelligence Centre. The purpose of the enquiry is not to embarrass honest buyers; it is to keep laundered money out of residential property. Straightforward cases close quickly with minimal documentation. Complex cases — particularly those involving offshore funds, multiple contributors, or lump sums without a paper trail — take longer and may stall a transfer if not addressed early.
Risks of cash purchases
Speed and cost savings come with the loss of certain institutional safety nets. A bonded purchase benefits from the bank’s own due diligence, and those checks are not replicated on a cash file:
- No bank-imposed valuation safety net. A buyer paying cash can easily overpay; the market is not providing a second opinion.
- No pre-transfer financial assessment. The bank’s affordability test on a bonded purchase is a rough sanity check on the buyer’s overall finances. A cash buyer has no such filter — so a purchase that leaves the buyer cash-poor after registration is still a purchase that proceeds.
- No NCA recourse. The National Credit Act’s protections (s 125 notice, debt review, reckless lending) are available only to buyers with a credit agreement. A cash buyer has no NCA recourse if problems emerge post-transfer.
- Source-of-funds burden. The conveyancer must satisfy FICA alone, with a higher threshold than when a bank has already vetted the funds.
- Tied-up capital. Cash locked in a property cannot earn investment returns, and re-accessing it later requires either a re-sale or a new bond registration.
None of these risks argue against cash purchases — they are simply items to manage. A cash buyer should commission an independent valuation, budget for a conservative cash reserve after registration, and work with a conveyancer who will take the source-of-funds conversation seriously at the outset rather than in the week of lodgement.
Mixed-use cases
Not every “cash” purchase is pure cash. Three variations recur in Pretoria practice:
- Partial cash plus partial bond. The buyer pays, say, 60% of the purchase price in cash and takes a bond over the remaining 40%. This is treated as a bonded purchase for all structural purposes — there is still a bond attorney, a simultaneous registration, and an initiation fee — but the bond is smaller and the bond-side fees scale down accordingly. The buyer retains the speed penalty of bond approval but often earns preferential pricing from the bank on the smaller loan.
- Bridging finance. A buyer whose cash is locked in a pending sale may use a short-term bridging loan to cover the gap between the two transactions. Bridging is expensive (often 2% to 4% per month), unregulated by the NCA, and lasts only until the source sale registers — at which point the bridging is repaid from the proceeds. Bridging adds a creditor to the transaction but does not change the fundamental cash-purchase structure.
- Trust or company cash buys. A family trust, an investment company or an SPV may purchase for cash out of its own liquidity. The FICA burden is heavier (resolution, trust deed or MOI, Master’s Letters of Authority, FICA on every trustee or director, source-of-funds on the entity) but the conveyancing mechanics are the same. See our spoke on buying property through a trust or company for the detail.
Frequently asked questions
On paper, yes. A cash purchase saves the bond registration attorney’s fee (a second LSSA-tariff fee on top of the transferring attorney’s fee), the Deeds Office bond fee, and the bank’s initiation fee (up to R6,037 under the NCA). On a R2 million property that is roughly R48,000 to R52,000 of direct savings.
The opportunity cost of a cash purchase is a different question, though. Home-loan interest rates are usually lower than the return on a diversified investment portfolio, so tying up R2 million in residential property may be more expensive over a decade than a bonded purchase financed at prime-less-one. Take financial advice on the trade-off; the conveyancing cost difference is not the whole picture.
Yes, without exception. Every conveyancer is an accountable institution under the Financial Intelligence Centre Act 38 of 2001 and must verify the origin of every rand of the purchase price before allowing the transfer to proceed. On a cash purchase there is no bank in the chain doing its own source-of-funds check, so the conveyancer’s enquiry is the only backstop — and the requirements are accordingly stricter. Expect to provide bank statements covering the period in which the purchase funds accumulated, sale agreements or inheritance documentation for lump-sum sources, and a signed source-of-funds declaration. A conveyancer who cannot reconcile the source of funds to the conveyancing trust account cannot lodge the transfer.
Foreign buyers and returning residents transferring funds into South Africa must comply with South African Reserve Bank (SARB) exchange-control regulations. The money must be imported through an authorised dealer bank, which issues an MT103 SWIFT confirmation recording the foreign source, the local beneficiary and the amount. The authorised dealer’s “non-resident” endorsement on the property is what allows the buyer to repatriate the sale proceeds in future.
Your conveyancer should receive the MT103 directly from the authorised dealer (not a scanned photocopy from the buyer) as part of FICA source-of-funds verification. Non-resident buyers should also obtain SARB’s formal approval where the funds are borrowed against a South African asset — see our spoke on non-resident buyers.
Yes — but only because two whole workstreams fall away. The conveyancer still has to obtain rates clearance from the municipality (the 10 to 15 working day bottleneck on every transfer), still has to prepare and submit the transfer duty declaration to SARS, and still has to pass three levels of examination at the Deeds Office. What the conveyancer does not have to do is wait for the buyer’s bond to be approved, coordinate with a bond registration attorney, or synchronise lodgement across three firms. On a clean cash file in Pretoria, we routinely register in 6 to 8 weeks where a comparable bonded file would take 8 to 12.