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 written notice of intent to cancel the bond to the lending institution. This step typically requires giving notice at least 90 days prior to expected cancellation of the bond. If the Bond is cancelled within this 90 day period, certain penalties may apply. 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 Conveyancer 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 usually comes from the proceeds of the property sale. 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. Also, if insurance premiums are debited from the home loan account, these should be transferred to a different account to ensure continuous coverage after bond cancellation. Additionally, cancellation fees, mainly comprising costs for the Deeds Office process and administrative fees, are handled by the Conveyancer and are the responsibility of the seller or bondholder.
Step 4: Registration of bond cancellation
The bond cancellation must then be registered with the Deeds Office, a step typically managed by the Conveyancer. This registration is the legal acknowledgement that the bond endorsement is removed from the property’s title deed, which is vital for legally freeing the property from the bond.
Step 5: 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 endorsements, if only the Bond was cancelled. If the Property was sold, the bond will be cancelled and a new title deed issued to the new owner of the Property.
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 obligations, 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.
While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither the writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.
Powered by SucceedGroup