A "loaded deal" is the term used for an agreement for the sale of a property where the purchase price is inflated to enable the purchaser to obtain a higher bond from a bank.
This kind of agreement is in effect a fraudulent transaction because the purchaser, with the assistance of the seller and the estate agent, is inflating the purchase price without disclosing this to the bank granting the purchaser's bond.
In some instances, the purchaser may be aware of the percentage of the purchase price that the bank is prepared to grant and will ask the seller and estate agent that the purchase price be inflated to cover the "shortfall". The seller then accepts the lesser purchase price on registration.
For example: a property is sold for R1 000 000.00. The bank will only grant 80% bond. The purchase price on the sale agreement is reflected as being R1 200 000,00 so that the bank will grant 80% of the R1 200 000,00. The seller later on informs the transfer Attorney either that he has received the fictitious R200 000,00 from the purchaser or that the purchase price is now reduced by R200 000,00 and that an Addendum to the purchase price should be signed but which is not disclosed to the bank.
Sometimes the purchase price is inflated to cover the costs of transfer. In such a case, the seller will pay the costs on behalf of the purchaser and when the bond is registered, the costs are refunded to the seller in terms of a separate, undisclosed agreement. The purchaser is happy to pay the additional transfer duty where necessary.
The banks and Conveyancers are aware of these loaded deals and try to minimize them by asking the transfer Attorneys to sign a certificate. As transfer Attorneys, we should not be accepting such deals and if one does come across our desks, we must notify the bank's Attorneys. If we do not disclose such information, we become accomplices to the fraudulent deal. The conveyancing system is dependent on the integrity and professional conduct of Conveyancers and as such the Conveyancer must not bring the profession into disrepute.