The bond registration process: A first-time home buyers’ guide

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Article summary

• Together with signing the Offer to Purchase and paying the deposit, registering a bond is one of key stages involved in the process of buying a home.
• In addition to the buyer, seller and estate agent, a number of attorneys may be involved in the bond registration process.
• Depending on the type of sale, the period of transfer can vary from anything between 6 and 12 weeks or longer.

It takes at least three months for the registration and transfer of a bond. But knowing what to do and where to get help will make the process considerably quicker and easier.

Here, our easy-to-understand guide takes you through the whole process of registering your bond and buying your home.

The parties

There are a number of people who will be involved in the bond registration process.

They are:
– The seller

– The estate agent

– The purchaser (you)

– The transferring attorney (appointed by the seller to transfer the property into the your name)

– The bond attorney (appointed by the bank granting the bond, to register the bond)

– The cancellation attorney (appointed by the bank with which the seller holds his or her bond, to cancel this existing bond)

Note that the same attorney could be appointed to handle more than one or even all of the above transactions.

The time frames

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

– A cash transaction: approximately six weeks.

– A sale that is contingent on the purchaser applying for and being granted a bond: approximately twelve weeks.

The process

Stage 1: The purchase / sale of the property

Property is traditionally sold by way of a written Offer to Purchase, 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 Offer to Purchase, too. A verbal contract for the sale or financing of fixed property is invalid, according to South African law.

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

If physical occupation and transfer do not coincide, the Offer to Purchase must specifically provide for occupational rent 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 Offer to Purchase, as must the period within which bond approval must be obtained to avoid the deal being delayed indefinitely.

Stage one is finalised when the agreement / Offer to Purchase is signed by both purchaser and seller. It should be noted that estate agents are not always party to the sale and therefore not obliged to attend the registration process.

Estate agents have their own Offer to Purchase, but an attorney can also draft one specifically suited to the needs of the parties concerned.

Stage 2: The payment of the deposit

The purchaser makes an initial payment (deposit) and receives a copy of the Offer to Purchase for his or her records, as does the seller. Simultaneously, the transferring attorney is furnished with the original deed or agreement of sale, making it possible to draw up the necessary documents. Finally, a copy is kept on file by the estate agency concerned.

Stage 3: The registering and approval of the bond

The purchaser applies for a bond with a bank – a bond originator will take care of this, cost free, on behalf of the purchaser. Once a bond has been granted by the bank, it advises the bond attorney to register the bond.

Fumigators may be instructed to inspect the property for infestation by beetles (it has become common practice for this condition to be added to the Offer to Purchase in coastal areas). Also, if the seller is not in possession of an electrical compliance certificate, plumbing compliance certificate or electrical fence compliance certificate, these will need to be obtained.

Factors that could delay the registration of a bond

– Failure by the seller and/or buyer to provide personal information.

– Failure by the seller to provide details of the bank holding the existing bond.

– Seller or buyer’s tax affairs not being up to date.

– Seller or buyer not complying with all clauses on the Offer to Purchase.

– Buyer not meeting all the special conditions of bond approval.

– The existing bondholder delaying/not providing cancellation figures and title deeds to the transferring attorney.

– A delay in receiving rates figures (local authority) and/or clearance certificate (transferring attorney).

– Failure by the buyer to pay a deposit (if required).

– A delay in the provision of guarantees.

– Failure by the buyer to pay the bond and transfer costs on time.

– A delay by the seller in signing the transfer documents.

– A 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.

– A delay by the buyer in signing the transfer and/or bond documents.

– When the bond attorney, transferring attorney and cancellation attorney are three separate firms.

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