When an application for a bond is granted (which in todays market happens in only 50% of the cases), the applicant will assume that it is irrevocable '“ but this is not so, says Tony Clarke, MD of Rawson Properties.
'What most bond applicants do not know is that the banks reserve the right to withdraw their bond right up to the day the sale is registered '“ and this can cause complications in the lives of both the buyer and the seller'
Why would a bank want to do this?
The most common reason, said Clarke, is that, having carried out comprehensive credit checks earlier, they then discover new evidence that throws light on the bond applicants apparent lack of financial trustworthiness.
In a recent case with which he was associated, the buyer suddenly found his bond cancelled because the bank had picked up an unpaid cell phone account. The seller had already left his home and the new bondholder '“ now suddenly without his bond '“ was about to move in.
'Fortunately in this case the reason for the account being not paid was 100% valid and the bank reinstated the loan,' said Clarke.
He warned, however, that this often does not happen.
'Bond applicants must ensure that their accounts are fully paid up in the run-up to registration. If even a small debt is neglected, the scorecard system of the banks will go into operation, the bond will be cancelled and endless problems will ensue. Regrettably, todays bank managers no longer have the right to use their own judgments and make a decision on these matters'
For further information contact Tony Clarke on 021 658 7100 or email tony@rawsonproperties.com.
