Legal rights of homeowners during the repossession process

November 2021, January 2022, September 2022, and November 2022 were pivotal months for many homeowners in South Africa who were forced to revaluate their financial positions with the interest rate increases.

Building and renovation regulations

Many buyers were pre-qualified and at the time of sale could afford their properties. However, with each hike of 0.75 basis points, they found themselves financially stretched. Each increase meant an extra R374 to R2 458 or more added to their monthly repayments, which some unfortunately found they could not afford – especially with impending increases looming around the corner.

The best way to avoid having to go through the repossession process is by communicating with the bank and restructuring your loan agreement. Most banks will detail in your loan agreement the extent to which they will legally go to obtain their money, with some having a policy of deducting a certain fee over a period of months to make up for the missed payment.

In cases where the money is not sufficient to cover the new debit order/deduction, it serves well to inform the bank of this before interest and the debt accruing even more. Homeowners must do their utmost to communicate with their bank to avoid being served a Section 129 letter according to the National Credit Act. The repercussions of receiving this letter will result in a judgment made in the bank’s favour – and result in an attachment of the property, sale of the property, and/or a garnishee order against you, whereby your employer can deduct an amount from your salary until the owed amount and legal costs have been covered. The effects of this can last for up to 30 years and the ruined credit rating can affect your quality of life.

1https://www.bloomberg.com/news/articles/2022-11-24/south-africa-raises-key-interest-rate-by-75-basis-points-to-7
2https://businesstech.co.za/news/property/646027/how-much-more-you-will-pay-for-your-bond-this-month-after-the-latest-interest-rate-hike/

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Legal rights of homeowners during the repossession process

November 2021, January 2022, September 2022, and November 2022 were pivotal months for many homeowners in South Africa who were forced to revaluate their financial positions with the interest rate increases.

Building and renovation regulations

Many buyers were pre-qualified and at the time of sale could afford their properties. However, with each hike of 0.75 basis points, they found themselves financially stretched. Each increase meant an extra R374 to R2 458 or more added to their monthly repayments, which some unfortunately found they could not afford – especially with impending increases looming around the corner.

The best way to avoid having to go through the repossession process is by communicating with the bank and restructuring your loan agreement. Most banks will detail in your loan agreement the extent to which they will legally go to obtain their money, with some having a policy of deducting a certain fee over a period of months to make up for the missed payment.

In cases where the money is not sufficient to cover the new debit order/deduction, it serves well to inform the bank of this before interest and the debt accruing even more. Homeowners must do their utmost to communicate with their bank to avoid being served a Section 129 letter according to the National Credit Act. The repercussions of receiving this letter will result in a judgment made in the bank’s favour – and result in an attachment of the property, sale of the property, and/or a garnishee order against you, whereby your employer can deduct an amount from your salary until the owed amount and legal costs have been covered. The effects of this can last for up to 30 years and the ruined credit rating can affect your quality of life.

1https://www.bloomberg.com/news/articles/2022-11-24/south-africa-raises-key-interest-rate-by-75-basis-points-to-7
2https://businesstech.co.za/news/property/646027/how-much-more-you-will-pay-for-your-bond-this-month-after-the-latest-interest-rate-hike/