Conveyancing and Property Transfers

 

 

Bond cancellation is the legal process of removing a mortgage bond from a property's title deed at the Deeds Office. It's a formal step handled by a specialized attorney (a conveyancer) and is required when you sell your property or pay off your home loan in full. Simply settling your debt with the bank does not automatically cancel the bond.

You must cancel your bond in three main scenarios:

  • Selling your property: The existing bond must be cancelled to allow for the legal transfer of ownership to the new buyer.
  • Paying off your home loan: Once your loan is settled, you can cancel the bond to remove the bank's claim on your property.
  • Refinancing: If you switch to a new home loan with a different bank, the old bond must be cancelled and a new one registered.

The National Credit Act allows banks to charge a penalty fee if you cancel your bond without giving at least 90 days' written notice. This penalty is typically a pro-rata amount of interest on the outstanding balance for the portion of the notice period that you did not provide. Giving notice early is the best way to avoid this fee.

The seller (the person whose bond is being cancelled) is responsible for paying the bond cancellation attorney's fees. These fees are a legal cost separate from the buyer's transfer costs.

Bond cancellation fees are generally based on a fixed tariff and vary depending on the value of the bond being cancelled. While they can differ between law firms, they are typically a few thousand rand. It's important to get a formal quote from the conveyancer upfront.

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Bond Cancellation Costs

Smooth and Cost-Effective Bond Cancellation - Your Guide

Selling your property or settling your home loan is a significant milestone. However, it's not as simple as making a final payment and being done. The legal process of bond cancellation is a crucial, often complex, and costly step that must be managed correctly to avoid delays and unexpected expenses.

At VDM Attorneys, we specialize in making this process seamless and cost-effective. We guide you through every legal requirement, ensuring a smooth journey from your first notice to the final cancellation at the Deeds Office.

In South Africa, bond cancellation is the legal process of formally removing a mortgage bond from a property's title deed at the Deeds Office. This is necessary when the home loan has been fully settled, typically due to the property being sold or the loan being paid off in full. It's important to understand that simply settling the outstanding debt with the bank does not automatically cancel the bond; a separate legal procedure must be followed by a qualified attorney

What You Need to Know About Bond Cancellation

Bond cancellation is the legal process of formally removing the bank's mortgage bond from your property's title deed. This is a non-negotiable step when you sell your home, pay off your bond, or refinance with a different bank. Until the bond is officially cancelled, the bank retains a security interest in your property, meaning you cannot transfer ownership to a new buyer.

The process involves several critical stages, and mistakes at any point can be costly.

Key Costs and Penalties to Avoid

Two main costs are associated with bond cancellation: the legal fees and potential penalty fees. VDM Attorneys helps you minimize these expenses.

1. The 90-Day Notice Rule

The National Credit Act (NCA) requires you to give your bank at least 90 days' written notice of your intention to cancel your bond. Failing to provide this notice can result in a penalty fee, typically equivalent to one month's bond installment for each completed month of notice not given.

Our service: We proactively manage this notice period on your behalf. By submitting your notice of intent to cancel at the earliest possible stage—ideally before you even list your property—we help you completely avoid this costly penalty. The penalty is typically waived if the property is part of a deceased estate, has been sequestrated, or if you're registering a new bond with the same financial institution.

2. Bond Cancellation Attorney Fees

The bank appoints a bond cancellation attorney from its panel to handle the legal process. These fees, which are the seller's responsibility, generally range between R5,500 and R6,500 but can be higher depending on the complexity of the matter and the bond value.

Our service: As a conveyancing firm, VDM Attorneys acts as your legal representative throughout this process. We provide transparency on all fees upfront, so you are never caught by surprise. We handle all liaison with the bank, the transferring attorney, and the Deeds Office, ensuring that the process is managed efficiently and cost-effectively.

The Bond Cancellation Process - Our Step-by-Step Approach

The cancellation process is intricate and requires careful coordination. We handle every detail to ensure a hassle-free experience.

  • Notice Submission: We submit the mandatory 90-day notice of intent to cancel to your bank on your behalf, safeguarding you from unnecessary penalty fees.
  • Requesting Figures: Once a sale agreement is in place, we request the final cancellation figures from your bank. These figures include the outstanding loan balance, interest, and any service fees.
  • Liaising for Settlement: We work directly with the transferring attorney to ensure the outstanding balance and our fees are settled from the proceeds of your property sale. We handle all financial and legal communications to guarantee a smooth and synchronized transaction.
  • Deeds Office Lodgement: We prepare the necessary legal documents, including the Consent to Cancellation, which is signed by the bank. We then lodge these documents, along with your original title deed and bond, at the Deeds Office for registration.
  • Finalization: Once the Deeds Office registers the cancellation, the bond is officially removed from your property's title deed. Your home is now free of the mortgage, and a new title deed will be issued to the new owner, completing the transfer.

Don’t Get Caught by Surprise

Many homeowners mistakenly believe that paying off their home loan automatically cancels their bond. This is not the case. The legal cancellation process is a separate and mandatory procedure. Delaying it can lead to unnecessary fees and complications in transferring your property.

Let VDM Attorneys handle the complexities of bond cancellation, so you can focus on the next chapter of your life. Contact us today for expert guidance and a smooth, cost-effective property transaction.