Mortgage Bonds and Conveyancing

The following are defined as immovable property, and include:

Vacant land for sale (plots), houses for sale, apartments for sale, flats and townhouses for sale which form part of a sectional title scheme in terms of The Sectional Titles Act 95 of 1986:

Houses which form part of a group housing scheme flats and townhouses forming part of a share block scheme in terms of the Share Blocks Control Act 59 of 1980; Accommodation in a housing development scheme as defined in the Housing Development Schemes for Retired Persons Act 65 of 1988.

All who enter into financial transactions should take note of the recently established Financial Intelligence Center Act (FICA), which calls for them to disclose all their personal particulars.

Before signing an offer to purchase, any clauses in the contract which are not completely understood by the buyer should be referred to an attorney for clarification.

In all property for sale transactions, the property buyer is responsible for the following costs:  Conveyancing fees which include transfer duty and fees, deeds office levies, stamp duty if applicable, pro-rata rates and taxes, and rates clearance certificate costs. In conjunction with these fees, if a mortgage bond is required, the bank will charge the buyer (mortgage) the following costs:

Initiation fee, valuation fee and administration fee, while the attorney will charge a fee to register a mortgage bond.

Unless another arrangement is made, the seller of the property is required to cover the following costs:estate agents commission (not applicable through Private Property Sales), entomologist certificate, electrical compliance certificate, cancellation fees for any bonds registered over the property.

Usually the Seller of the property nominates the Conveyancing Attorney.

Mortgage Bonds

A mortgage bond is an agreement whereby the buyer (mortgage) borrows funds from the bondholder or mortgage, and agrees to pass a mortgage bond over specific immovable property in favor of the mortgagee as a security for the repayment of the money.

The purchases or mortgage then repays the capital amount plus interest back to the mortgage in terms of the loan agreement.
In most cases the mortgagee will be a bank or financial institution.  The mortgage bond is registered in the Deeds Office against the Title Deed, and a conveyancing attorney must be appointed by the buyer to handle the registration of the mortgage bond in the deeds office.

The Conveyancing Process

Conveyancing refers to the legal process during which a person, company, close corporation or trust is appointed the legal owner of fixed property and ensures that such ownership cannot be challenged, and also incorporates the process of the mortgage bond registrations.

The conveyancer is an attorney who by law is the only one permitted to register fixed property transfers. This is necessary to ensure the protection pf the various interests of the parties involved in the transaction, and to maintain the high standard applicable to land registration.

The first requirement in this process is that there be a valid agreement of sale, which is a written agreement signed by both the property buyer and sellers(and the seller’s spouse in cases of marriage in communion of property, or account to the laws of a foreign country). A written offer to purchase, signed by buyer and accepted by a seller also constitutes a binding agreement. A verbal agreement for the sale of fixed property is considered to be invalid.

Once the appointed conveyancer is provided with a valid agreement of sale/offer to purchase, they will continue by drafting the necessary documents which will require signing by both the purchaser and the seller, at the offices of the conveyancer.

The above mentioned documents to be signed include:
A Power of Attorney to Pass Transfer,
Declaration in respect of Marital Status, Identity Number and Insolvency,
Transfer Duty and Value Added Tax (VAT) Declaration,
FICA Documents,
Bond Documents, if a Mortgage Bond is to be registered.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

INTRODUCTION

A creditor who advances money to a debtor usually requires the debtor to provide some form of security for the repayment of the debt. Two main forms of security can be distinguished, namely:

Personal security: An individual can bind himself/herself personally as surety for the repayment of another’s debt in the event of non-payment by the debtor himself. Should the debtor not pay, the surety will be called upon to pay on behalf of the debtor.

Real security: A borrower (Mortgagor) can offer his immovable property to a lender (Mortgagee) as security for the repayment of a debt. The Mortgagee (normally a bank) will cause a mortgage bond to be registered over the immovable property as security for the fulfilment of the Mortgagor’s obligations.

WHO IS THE MORTGAGOR AND WHO IS THE MORTGAGEE?

The Mortgagor is the individual, company, close corporation, partnership or trust who has borrowed money to finance the purchase of an immovable property and mortgages his/her property as security for repayment of the loan.

The Mortgagee is the Bank, Financial institution, employer or individual who lends the money to the Mortgagor and in whose favour the mortgage bond is registered.

WHAT IS A MORTGAGE BOND?

A mortgage bond is based on an agreement in terms of which the Mortgagor borrows money from the Mortgagee and aggresses to pass a mortgage bond over a specific immovable property in favour of the Mortgagee as security to the Mortgagee for the repayment of money.

WHAT PROPERTY IS CAPABLE OF BEING MORTGAGED?

All immovable property, improved or unimproved, which is registerable in a Deeds Office can be mortgaged. This includes a flat as well, if it is held under sectional title and is owned by the Mortgagor.

WHAT ARE THE CONSEQUENCES OF FAILURE TO PAY INSTALMENTS?

Foreclosure is the term describing the procedure followed in this event, if the Mortgagor fails to fulfil his/her obligations towards the Mortgagee, the latter can enforce his/her rights against the Mortgagor by calling up the bond and obtaining a Court Order which authorizes a sale in execution after due notice has been given to the Mortgagor. A Bank therefore cannot immediately cause a property to be sold in execution merely because a Mortgagor failed to pay an instalment.

WHAT IS THE “ADDITIONAL SUM” AS PRESCRIBED IN THE MORTGAGE BOND?

The mortgage bond secures not only the principal obligation of the debtor, but also ancillary expenses which the Mortgagor may incur in respect of the property such as insurance, maintenance expenses, the legal cost of pursuing the claim and arrear interest. Thus in a bond document provision is made for an “additional sum” over and above the amount borrowed, being the amount intended to cover the aforementioned items in the event of the Mortgagee having to foreclose on the bond.

By choosing Mortgage Plus for a mortgage bond, you will get that continual service to make sure you are getting the best deal possible.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za