Your Home Buyers Guide to the Bond Registration Process

Who’s involved:

• The buyer (you)
• The seller
• The estate agent
• The bond attorney (appointed by the buyer’s bank)
• The transfer attorney (appointed by the seller’s bank)
• The cancellation attorney (appointed by the seller’s bank)

The same attorney can fulfill all three roles in some cases, but there are usually at least two attorneys involved, one on the buyer’s behalf, and one on the seller’s behalf.

Step one: Negotiate and Sign an Offer To Purchase

You’ve just seen the house of your dreams, and you head to the estate agent’s office to sign an offer to purchase (OTP). The OTP is a legal contract detailing:

• The conditions of sale
• Fixtures and fittings
• Occupation date
• Occupational rent
• Deposits
• The purchase price and
• Any additional clauses (e.g. expiry date on the offer, the estate agent’s commission, and compliance certificates).

Once the OTP has been negotiated and agreed on by both parties (you and the seller), you’ll need to apply and be approved for a bond (or home loan).

Tip: The OTP can be negotiated. Do your research on the property, its valuation, and the area and be prepared to make the seller an offer they can’t refuse.

Step two: Pay the Deposit

The deposit is usually 10% of the property value and is paid by the buyer to the seller as a show of good faith.

Paying a deposit is common practice in South Africa, but it is not mandatory to make the OTP binding.

Tip: Save up for the deposit and do your best to pay off any existing (especially short-term) debt before buying your first home. This will improve your chances of getting your bond approved.

Step three: Apply (and Get Approved) for a Bond

You have the option to apply for a bond through the banks directly, or through a bond originator.

A bond originator will gather all the necessary documentation and make an application on your behalf. Bond originators can also negotiate good deals with the banks.

The bond approval process (securing a home loan) should ideally take about a week, provided that all your (and the seller’s) documentation is in order.

Tip: Contact your bank or a bond originator and apply for pre-approval before shopping for a property. Pre-approval is valid for 90 days and will indicate to the seller that you qualify for a loan. This will speed up the process, giving you an advantage over other buyers.

Step four: Register the Bond (in your name)

1. Your chosen bank will appoint a bond attorney who will request the deed transfer documents and guarantee from the transfer attorney, who collects this information from the cancellation attorney. The bond attorney uses this information to draft bond documents.
2. Once the transfer documents are drawn up, the buyer and seller sign them.
3. Then, the transfer costs are paid by the buyer. The rates and taxes and Transfer Duty are paid by the transfer attorney.
4. The bond documents are drafted and signed by the buyer. The transfer attorney sends these documents to the cancellation attorney and gets approval from the seller’s bank.
5. The bond costs are paid by the buyer to the bond attorney.
6. Once all the documents are signed and the necessary costs paid, each of the attorneys submits their documents to the Deeds Office to transfer the property into the buyer’s name. This process takes between 7-10 days.
7. On the day of transfer, the bank pays the amount for the bond, and the buyer officially owns a new property.

Avoiding Delays

The time taken to secure bond approval and complete registration depends on a number of factors.

A cash sale will take six weeks to complete, whereas bond approval, especially if it is dependent on the sale of the buyer’s current home, can take up to three months.

Delays can be caused by:

• The seller and/or buyer failing to provide accurate personal information.
• The seller failing to provide details of/to the bank holding the existing bond.
• The existing bondholder not providing cancellation figures and title deeds to the transfer attorney.
• Failure to receive rates figures from the local authority and/or clearance certificates.
• The buyer failing to pay a deposit (if required), transfer and/or bond costs on time.
• The buyer/seller delays the signing of transfer and/or bond documents.
• A delay by the buyer in obtaining government capital subsidy approval/employee subsidy documents for new bondholders and failure to comply with other bank requirements.
• The bond attorney, transfer attorney and cancellation attorney being at three separate companies or firms.