UNDERSTANDING MORTGAGE BOND CANCELLATION: KEY STEPS AND CONSIDERATIONS

In South Africa, the process of cancelling a mortgage bond is commonly necessitated when a property is sold or the bond is fully paid off. This procedure is intricate, consisting of several critical steps:

Step 1: Notice of cancellation

Initially, the property owner must submit a notice of intent to cancel the bond to the lending institution. This step typically requires a 90-day written notice. However, there are exceptions to penalty fees for failure to provide this notice, such as when the property is part of a deceased estate, a sequestrated estate, or if a new bond is being taken with the same institution.

Step 2: Request cancellation figures

Following the notice, a conveyancing attorney should be instructed to request cancellation figures from the lending institution. These figures, which include the outstanding balance, interest due, and service fees, are essential to determine the total amount needed to settle the remaining debt.

Step 3: Settle outstanding amounts

After obtaining the cancellation figures, the next step is to settle all outstanding amounts. This settlement usually comes from the proceeds of the property sale. It's important to note that from the date the settlement figures are issued until the bond is officially cancelled, lenders charge interest on the outstanding balance. Also, if insurance premiums are debited from the home loan account, these should be transferred to a different account to ensure continuous coverage after bond cancellation. Additionally, cancellation fees, mainly comprising costs for the Deeds Office process and administrative fees, are handled by the conveyancing attorney and are the responsibility of the seller or bondholder.

Step 4: Issue and receive the bond cancellation certificate

Once financial obligations are settled, including outstanding amounts and necessary fees, the lender issues a bond cancellation certificate. This certificate is pivotal as it officially indicates that the bond against the property is fully settled with no remaining debts.

Step 5: Registration of bond cancellation

The bond cancellation must then be registered with the South African Deeds Office, a step typically managed by the conveyancing attorney. This registration is the legal acknowledgement that the bond is removed from the property's title deed, which is vital for legally freeing the property from the bond.

Step 6: Confirmation and finalisation

Finally, upon completion of the bond cancellation registration, either the homeowner or the new property owner, if the property was sold, receives confirmation that the process is complete. This typically includes receiving a clean title deed, now free from any bond annotations.

The bond cancellation process in South Africa is a meticulous and structured procedure. It starts with notification of intent, proceeds through obtaining and settling financial figures, involves paying legal and administrative fees, and culminates in the legal removal of the bond from the property's title deed. This comprehensive process is crucial for ensuring clear property ownership transfer and finalising the homeowner's financial obligations, thereby maintaining the integrity of property transactions and ownership in South Africa.