Once a property has been sold and the seller still has an outstanding bond over his property the bank will need to be informed of the seller’s intention to cancel his bond.
If the seller did not notify the bank before selling the property, the conveyancing attorney will do so on behalf of the seller. The banks require a 90-day early settlement notice.
The bank instructs the cancellation attorney to attend to the cancellation, giving the attorney the exact cancellation figure, which includes:
- The month-end balance prior to cancellation figures being issued.
- 90 days interest (if applicable).
- The homeowner’s insurance premiums would have been debited to the bond account in the next 6 months. (This is done to ensure that the property is insured until the transfer takes place).
- The credit life assurance premiums would have been debited to the bond account in the next 6 months. (This is done to ensure your life remains assured until the transfer takes place).
- All the legal costs, interest and/or early settlement charges.
The seller’s conveyancer will issue the bond cancellation attorney with a guarantee confirming that the outstanding bond and cancellation penalties will be paid to the respective bank, via their attorney, upon registration in the deed’s office.
If the bank receives more than the amount needed to repay the seller’s home loan, it will refund him a few days after registration.
Upon registration, the title deeds will be held by the purchaser’s bank until the purchaser chooses to settle his bond with them.
If a homeowner wishes to cancel his bond without selling his property, he is free to do so. The same cancellation process will be followed as above except that the title deed will be handed to the homeowner once the bond has been lifted from the title deed in the deed’s registry.