What should I know about bond registrations and cancellations?

For the majority of property buyers, taking out a bond to help finance the purchase of their dream home is an essential step of the process. The good news for Snymans clients is that our experienced team can guide you through the process…

February 26, 2020

To make sure you know what to expect from the bond registration and bond cancellation process, we’ve put together this simple step-by-step guide.

Firstly, it’s important to bear in mind that there are timeframes within which the process needs to be completed. This is to protect a seller from being tied to an offer to purchase and waiting indefinitely for the necessary conditions to be met. As such, a buyer should always work closely with their attorneys and provide all requested information timeously to avoid delays.

Here is what you need to understand about the bond registration process and the answer to the question ‘what does a bond attorney do?’:

Step 1: After the bond approval process has been successful, the financial institution will appoint a bond registration attorney. Upon receipt of the instruction, the bond attorney will make contact with the buyer / client and explain the process and outline what documents and information are required.

Step 2: While this is happening, the seller will provide the transfer attorneys with the required information in order to process the cancellation of their bond (e.g. requesting cancellation figures from the financial institution with whom the seller’s bond is held). If the property is not bonded, the seller will instead provide the transfer attorneys with the original title deed.

Step 3: The bond attorneys will then receive the draft deed and guarantee requirements from the transfer attorneys. The guarantee serves as a clear indication to all parties that the required funds are available, although they will only be released on the date of registration.

Step 4: The bond attorney will also prepare and draft the mortgage loan agreement and supporting documents as per the financial institution’s conditions and legislative requirements. The buyer / client will be called upon to sign the bond documentation and to provide original FICA documents.

Step 5: Once the bond attorney submits the signed legal agreements and supporting bond documents to the financial institution (depending on the financial institution, this may be done electronically or manually), the financial institution will indicate whether all requirements have been met or if any documents are outstanding. If any additional information is required, the bond attorney will request this from the buyer / client in order to submit this to the financial institution.

Step 6: Once all legal representatives (bond, transfer and cancellation attorneys) have the necessary documents and information to hand, they will arrange a date for lodgement at the Deeds Office. All attorneys are required to lodge simultaneously in the Deeds Registry.

Step 7: It takes approximately seven to ten working days for the Deeds Office to examine the documents, after which registration can be affected.

While the process is managed carefully by the various conveyancing attorneys involved, both sellers and buyers should do their homework on the processes involved. This will help avoid any surprises or delays along the way.

For example, a seller should be sure to provide their financial institution with the necessary notice to cancel their bond to avoid penalties. Buyers should also pay close attention to what documents are required by the financial institution who granted their bond to ensure that all documents can be gathered and sent timeously.

At Snymans, we believe that communication is the key to ensuring the bond registration or bond cancellation process runs smoothly. As such, we aim to provide exceptional service and regular status updates to ensure our clients are kept in the loop and can remain relaxed and confident that all is on track.

Written by Wessel de Kock

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