If you have a registered bond over your property it will have to be cancelled before your property can be transferred. Even in cases where the loan is settled, the bond still has to be cancelled in the Deeds Office. The cancellation of the bond will be effected simultaneously with the transfer of the property in the Deeds Office.
A request to cancel the bond will be issued to your bank by the attorney who is nominated by the customer. On receipt of this request, the bank will calculate the cancellation figures which will be issued to the Bank’s cancellation attorney together with the Bond document and Title Deed to start the cancellation process. The Bank’s cancellation attorney will liaise with the customer’s cancellation attorney.
In terms of the National Credit Act the bank may charge penalty interest if 90 days written notice of intention to cancel the bond is not given to the bank. Should the notice period be shorter, the bank will charge pro rata penalty interest. The penalty interest for one month is equal to a month’s interest payable on your bond.
Cancellation costs of the existing bond are for your account. The guideline as given by the Law Society is approximately R2 000. (it may have changed in the mean time) but this is what you pay the attorney who is doing the job for you, in addition to any penalties by the bank as described above.
You should notify your bank in advance of the pending sale. This is in addition to the attorney requesting cancellation figures/letters of guarantee for the existing mortgage bond. Please note that a 90 day notice period is required by the bank to cancel the bond.
You may give this required notice yourself before the property is placed on the market or you can leave this task to your attorney.