You’ve found your dream house and handed in all the paperwork at the bank – copies of IDs and marriage certificates, bank statements, FICA documentation, assets and liabilities and monthly income and expenses – what next? You won’t get very far without using an attorney. Their services will be required for both the transfer of the property (where you can insist on using an attorney of your choice, though many estate agents will recommend specific firms) and the registration of the bond (where, in practice, the bank will appoint a firm). Once the bank has approved your home loan, an attorney will be appointed to deal with the registration of the bond. This is done by a letter of grant – a document that sets out the terms and conditions of the loan and requests that as security for the loan, a mortgage bond is registered in favour of the bank. This means that the house is used as security for the loan. Should you therefore default on your home loan payments, the bank will have the right to sell your house to recover its debts. The bond will be registered in the bank’s name, while the property is registered in your name. Registering a bond can be a lengthy process, as numerous parties including the estate agents, buyer and seller and different lawyers are involved. The attorney dealing with the transfer of the property, for example, will have to provide a copy of the draft title deed to the bank’s attorney, who is dealing with the registration of the bond. Typically it takes three to four months to get a bond registered, but this varies. Some of the documents to be signed in order to register a bond, include the following:
A power of attorney to mortgage – this gives the attorneys the authority to register a mortgage bond on behalf of the clients in favour of the bank
Authority for payment – this instructs the bank to make the funds available upon registration
Letter of grant – this document sets out the terms and conditions of the home loan.
Draft mortgage bond – this records the client’s financial obligations to the bank and is lodged in the deeds office.
Should the bank require life cover, or if you need a guarantor for the loan, additional documents will have to be signed. In addition to home owners insurance, transfer fees and commission for the estate agents, the buyer also needs to pay the lawyers and the deeds office to get the mortgage registered. These registration fees are based on the value of the home loan.Once all the documents are signed and fees have been paid, the attorneys prepare the necessary guarantees to secure the purchase price of the property. These guarantees are forwarded to the attorneys dealing with the transfer, who will send all the required documents to the deeds registration office.As soon as the property is registered at the deeds office, the transferring attorney will present the guarantees to the bank and receive payment of the funds. Payments will be due from the first day of the month following registration.It is also important to note that once the bond is registered, the transfer of the property is not yet completed. Additional paperwork will include a rates clearance certificate from the local municipality, indicating that all rates and taxes for the current rates year have been paid, and a transfer duty certificate from the South African Revenue Service.