A guide to the bond registration process

How do you register a bond and who are the parties involved in the process? We take a look at what happens when you buy a home and register a bond.

The first thing we take a look at is the parties involved in the sale or purchase of a property:

- Seller  
- Estate Agent  
- Purchaser
- Transferring Attorney (appointed by the seller to transfer the property into the buyer's name)  
- Bond Attorney (appointed by the bank, granting the bond to register the bond)  
- Cancellation Attorney (appointed by the bank, canceling bond of seller to cancel the previous bond)  
- The same attorney could be appointed to handle more than one or even all of the above transactions.  

The Transfer Process   

While the transfer process follows a series of successive stages, the time period involved varies considerably.   Generally the following guidelines apply:  

- A cash transaction might take approximately 6 weeks  
- In normal circumstances, including bond approval, approximately 8 weeks  
- If conditional upon the sale of the purchaser's property (within 30 days), approximately 12 weeks.  

Step 1 - The Purchase / Sale of a property   

Property can be sold by way of a written Deed of Sale, signed by both the purchaser and the seller, as well as their spouses if they are married in community of property. Witnesses need to sign the Deed of Sale as well. A verbal contract for the sale or mortgage of fixed property is invalid.

The Deed of Sale must be carefully examined to ensure that it accurately reflects the parties' full agreement, especially with regard to the amount payable, the method of payment, all verbal promises made by the seller or his estate agent, the incorporation of all special conditions to suit the parties' particular needs and the time of the buyer's physical occupation of the property (which may coincide with registration) and transfer of the property.

If physical occupation and transfer do not coincide, the deed of sale must specifically provide for occupational rental payable between the dates of occupation and transfer. If the sale is subject to the buyer obtaining a bond, this must also be specified in the deed of sale, as must the period within which bond approval must be obtained to avoid the deal being delayed indefinitely. 

Step 1 is finalised when the Agreement/Deed of Sale is concluded/signed between the purchaser and the seller, having been brought together by the estate agent.  It must be noted that  Estate Agents are not always a party to the sale and are therefore not compulsory to the registration process.  Estate Agents have their own Deeds of Sale, although an attorney can draft one specifically suited to the needs of the parties concerned.   

Step 2 

The purchaser makes an initial payment (deposit) and receives a copy of the Deed of Sale for his or her records as does the seller. Simultaneously, the Transferring Attorney is furnished with the original Deed / Agreement of Sale, making it possible to draw up documents. A copy is kept on file by the Estate Agency concerned.  

Step 3 - Bond application and approval

The purchaser applies for a bond with a bank. Once a bond has been granted by the bank, it advises the Bond Attorney to register the bond. 

If the bank requests it, fumigators may be instructed to inspect the property for infestation by beetle,the beetle certificates are usually only compulsory in coastal regions. Also, if the seller is not in possession of an Electrical Clearance Certificate, this will need to be obtained. 

Here is a list of the Five Compliance Certificates that you need to obtain

Step 4 - Property transfer  

The documents required to enable transfer to be passed (power of attorney conferred upon the conveyancing attorney; Transfer Duty Declaration) are drawn by the transferring attorney.

The title deed and bond cancellation figures are requested from the bank which currently has a bond over the property.  

Step 5 - Rates clearance certificate and transfer documentation  

A Rates Clearance Certificate (a document stating that all rates and taxes for the current rates year have been paid) is obtained from the municipality by the Transferring Attorney . 

The Bond Attorney advises the Transferring Attorney of the amount available for guarantees and requests the draft deed of transfer and guarantee requirements. The Cancellation Attorney is requested to cancel the seller's bond, on receipt of a guarantee for the amount owing. 

The Transferring Attorney receives the title deed and bond cancellation figures and sends a copy of the deed of transfer and the guarantee requirements to the Bond Attorney. The Transferring Attorney requests the purchaser and seller to sign the transfer documents. The purchaser pays the transfer costs and the Transferring Attorney then pays the rates and taxes and the transfer duty to the South African Revenue Service. A Transfer Duty Receipt is issued.  

Bond Documentation

The Bond Attorney prepares the bond documentation together with the relevant statement of account. The purchaser signs the documents and pays the costs. The Bond Attorney prepares and issues the necessary guarantees, forwards them to the Transferring Attorney and prepares the bond documents for lodgment in the Deeds Office. Once the Transferring Attorney has received the guarantees, they are forwarded to the Cancellation Attorney.

Bond Cancellation

The Cancellation Attorney obtains consent to the cancellation from the bank which holds the seller's bond. 

Lodement at the Deeds Office 

After all the documentation has been signed and the costs paid, the transfer (including rates clearance certificate), new bond and cancellation bond documents are prepared by the respective attorneys for lodgment in the Deeds Office. All Bond and Transfer documents are inspected by the deeds registry and if correctly prepared, come up for Registration. It usually takes approximately 2 to 3 weeks to check the documents before they are ready for Registration. At this stage the purchaser must have the balance of the cash purchase price available, and the financial institution's attorneys have the bond amount available. If the purchaser is not able to make the funds available, the seller's conveyancer will delay registration, which may be postponed for no more than 3 to 4 days before the deeds are rejected and will need to be re-lodged. The purchaser may then be put to terms and given 7 days written notice to rectify the default. Allow at least 12 weeks for the registration and transfer of the bond.  

Step 6 

After Registration, the Title Deeds become available - about 2- 6 months from the time of registration.  Factors that could delay the registration of a bond / transfer: 

- Failure by the seller and/or purchaser to provide information 
- Failure by the seller to provide details of the bank holding the existing bond 
- The existing bondholder delaying/not providing cancellation figures and Title Deeds to the transferring attorney 
- Delay in receiving rates figures (from the municipality) and/or a clearance certificate 
- Failure by the purchaser to pay a deposit (if required) 
- Delay in the provision of guarantees 
- Failure by the purchaser to pay bond and transfer costs on time 
- Delay by the seller in signing the transfer documents 
- Delay by the buyer in obtaining government capital subsidy approval/employee subsidy documents for new bondholders and failure to comply with other requirements of the bank 
- Delay by the purchaser in signing the transfer and/or bond documents.

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