The Bond Registration Process

A Client will often require funds to assist in the purchasing of a property, or to improve their existing property, or to consolidate his or her debt. In order to cater for their needs they will go to a Bank for a loan. Let’s describe the Bond registration process in relation to the above needs.

Purchase of a New Home

The client will make an application for a loan to the Bank setting out full details of assets and liabilities. Once the Bank has approved the loan, the Attorneys (Conveyances) are instructed to attend to the registration by means of a letter of grant setting out the conditions of the grant of loan and requesting that as security for the loan a Mortgage Bond be registered in favour of the Bank over the property being purchased.

The Attorney attending to the transfer of the property (Transferring Attorney) will be contacted by the Bank’s Attorney requesting from them a copy of their draft title deed.

The Bank’s attorney will also make contact with the client (also known as the Mortgagor) and request copies of their Identity documents and marriage certificates if applicable (as well as other fica documents).

When the Bank’s attorney receives the above mentioned documents he will draw the mortgage bond documents and will call upon the client to sign and pay the pro-forma account for the registration of the Mortgage bond. Payment thereof will be required immediately especially as the costs include deeds office lodgment fee which must be paid up front.

Documents to be Signed

A Power of Attorney to Mortgage – this document gives the attorneys the Authority to registera mortgage bond on behalf of the clients in favor of a Bank.

Authority for payment – this document instructs the Bank on registration to make payment of the borrowed funds.

Letter of grant – this is the terms and conditions of the Bank where upon signature the clients acknowledges its obligations to the Bank.

Draft Mortgage Bond – this is the document that records the client’s financial obligations to the Bank in the deeds office.

Affidavits – this confirms the client’s personal particulars regarding marriage and insolvency.

Surety ship – is required when a client needs a guarantor for the loan.

Cession of Life Cover – should life cover be required by the Bank – the client cedes an existing policy or takes out a new policy.

After signature and payment of costs have been received, the Attorneys prepare the necessary guarantees to secure the purchase price of the property. These guarantees are then forwarded to the transferring Attorneys. The Power of Attorney and draft Mortgage bond are forwarded to the Deeds registration Office where the documents are systematically checked over a period of 10 to 14 days and registered thereafter.

On registration the transferring attorney presents the guarantees to the Bank and receives payment of the funds. The New mortgagor’s loan is now operational and monthly payments will be due from the 1st day of the month following registration.

Below is a comprehensive guide, which details all the role-players and the various steps involved. We’ll also consider the factors that could delay the registration of the Home Loan.

Step 1: Purchasing a Property

The Buyer applies for a new Home Loan after both the Buyer and the Seller have signed the Offer to Purchase. The Buyer may choose to approach all the banks directly or he may choose to use the free service offered by a bond originator who will then process the home loan application on his behalf.

Step 2: The Home Loan is approved

This is one of the more exciting times during the registration process, where the buyer learns that his home loan application has been approved and accepted.

Once the home loan has been approved the bank will advise the Bond Attorney to register the bond.

Step 3: Property Transfer

The procedure after the bond has been approved.

At this stage the focus is turned from the Mortgage originators and Banks, to the Attorneys involved in the Bond registration.

The Transferring Attorney is now advised by the seller to begin the transfer of the property. The attorney will request the title deed and bond cancellation figures from the bank which currently holds the bond over the property. A statement of the rates and taxes are also requested from the local authority.

Step 4: Draft Deed of Transfer and Guarantees

The Transferring Attorney requests the draft Deed of Transfer and the guarantee requirements from the Bond Attorney

Step 5: Cancellation

After receiving the guarantee of the amount owing the Cancellation Attorney is requested to cancel the seller’s home loan.

Step 6: Transfer

The Transfer Attorney requests the Buyer and Seller to sign the transfer documents. Once the documents have been signed the Buyer pays the transfer costs and the Transfer attorney then pays the rates, taxes and transfer duty.

Step 7: Bond Attorney

The Bond Attorney prepares the mortgage documentation for lodgment at the Deeds Office.

Step 8: Deeds Office

All the documents are lodged at the Deeds Office by the attorneys.

Step 9: Bank Pays out the Home Loan

On the day of registration the bank pays out the loan in accordance with the guarantees issued.

Factors that could delay the bond registration process:

1. When the Bond, Transferring and Cancellation Attorneys are three different firms.
2. Failure by the buyer to pay the bond and transfer costs
3. Delay in signing the transfer documents
4. Failure by the buyer to pay the deposit (if required)