In South Africa, the process of cancelling a mortgage bond is commonly necessitated when a property is sold or the bond is fully paid off. This procedure is intricate, consisting of several critical steps:
Step 1: Notice of cancellation
Initially, the property owner must submit a notice of intent to cancel the bond to the lending institution. This step typically requires a 90-day written notice. However, there are exceptions to penalty fees for failure to provide this notice, such as when the property is part of a deceased estate, a sequestrated estate, or if a new bond is being taken with the same institution.
Step 2: Request cancellation figures
Following the notice, a conveyancing attorney should be instructed to request cancellation figures from the lending institution. These figures, which include the outstanding balance, interest due, and service fees, are essential to determine the total amount needed to settle the remaining debt.
Step 3: Settle outstanding amounts
After obtaining the cancellation figures, the next step is to settle all outstanding amounts. This settlement can come from the proceeds of a property sale or be paid in cash. If the settlement is from sale proceeds, a guarantee against these proceeds should be provided to settle the outstanding amount upon registration. It’s important to note that from the date the settlement figures are issued until the bond is officially cancelled, lenders charge interest on the outstanding balance. If insurance premiums are debited from the home loan account, they should be transferred to a different account to ensure continuous coverage after bond cancellation. Additionally, cancellation fees, which mainly consist of costs for the Deeds Office process and administrative fees, are handled by the conveyancing attorney and are the responsibility of the seller or bondholder.
Step 4: Consent to Cancellation
Once the outstanding amount is paid or secured, the lender issues a consent to cancel the bond. This consent is pivotal as it officially indicates that the bond against the property is fully settled or that satisfactory provision has been made to settle it upon registration of the transaction.
Step 5: Registration of bond cancellation
The bond cancellation must then be registered with the Deeds Office, a step typically managed by the conveyancing attorney. This registration is the legal acknowledgement that the bond is removed from the property’s title deed, which is vital for legally freeing the property from the bond.
Step 6: Confirmation and finalisation
Finally, upon completion of the bond cancellation registration, either the homeowner or the new property owner, if the property was sold, receives confirmation that the process is complete. This typically includes receiving a clean title deed, now free from any bond annotations.
The bond cancellation process in South Africa is a meticulous and structured procedure. It starts with notification of intent, proceeds through obtaining and settling financial figures, involves paying legal and administrative fees, and culminates in the legal removal of the bond from the property’s title deed. This comprehensive process is crucial for ensuring clear property ownership transfer and finalising the homeowner’s financial obligations, thereby maintaining the integrity of property transactions and ownership in South Africa.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).