4 Things You Should Know About the Bond Registration Process in South Africa
The bond registration process in South Africa is fairly simple to understand but it can be daunting. The information, paperwork, and clauses that homebuyers have to initial and sign can be very overwhelming. And then there is the clock tick-tick-ticking its way to all sorts of deadlines!
Even though the attorneys handle all of the nitty gritty, you still play a vital part in the process. Being confused over paperwork isn't the sort of stress you need when all you want to do is move into your new home.
Luckily, we have compiled a comprehensive guide that will help you navigate your way through the bond registration process. Here are a few things you should keep in mind during the journey.
1) Don't delay the bond registration process
The bond registration process requires the buyer to act fast but not too hasty that you make silly mistakes. As soon as you have submitted the offer to purchase (OTP) start contacting financial institutions so that you can get pre-approved.
It is always better to know from the start what you can afford and what banks are willing to lend you. This puts you in a better position to obtain a loan from a bank as soon as they accept the OTP.
Make sure you understand the terms of the OTP as well as the terms of your pre-approval from the bank. This will prevent any unnecessary mistakes from happening further down the line.
2) Make sure your paperwork is in order
There are several FICA and credit documents that you need to finalize the bond registration process. If you prepare them in advance, you can submit them as soon as it is time to sign.
These documents include proof of residence, a copy of your identity document, your income tax number, details of your marriage as well as solvency status, and details of the mortgage financing.
When submitting these documents, ensure that all your information is relevant and up to date! The last thing you want is to have the process delayed because you forgot to change something small.
3) Understand the legal jargon of the bond registration process
If you skim over the documents and you don't understand a word of them, don't fear! Legal talk is something that most people don't quite comprehend. You must ask enough questions so that you have an understanding of what it is you are going to sign. Let's look at some terms that will pop up:
- Subject to bond approval: The Deed of Sale includes several suspensive conditions that the seller or buyer has to meet before moving forward. One of them might state that the sale can only go through once the bond has been approved. Another might state that you have additional time to get more funds should you not get a 100% loan.
- Lapsed offer to purchase: This clause focuses on the duration of the OTP. Most sale agreements include a blank space where you can indicate how long the seller has to accept your offer. The seller might reject the offer by adding changes and conditions to your OTP. If you reject these changes, the OTP will lapse. If you accept it, then you need to draw up a new OTP. If the seller accepts the OTP as is after the expiration date, you have the right to ignore the expiration date and continue with the sale. However, it might cause disputes along the line so it is better to create a new OTP in this case.
- Voetstoots: The 'voetstoots' clause means that the house is sold as-is. It protects the seller from being responsible for any faults that they are not aware of or defects that can be detected when viewing the property. However, as part of the bond registration process in South Africa, the seller must disclose all known defects or abnormal qualities of the property to the buyer. If it turns out that the seller didn't disclose the defects he knew about you can take them to court. You can even cancel the transfer completely!
4) Know what you are responsible for
The buyer and the seller will have their own set of responsibilities. The best thing would be to communicate what each party expects of the other. Google is also your best friend in this regard - get as much information as possible!
The buyer, for example, is responsible for checking the property, submitting documents on time, and making sure they secure a loan.
The seller, on the other hand, is responsible for accepting or rejecting the OTP, disclosing all defects of the property, and paying any outstanding municipal rates, utilities, and/or levies.
The more you know during this stage of the process, the more empowered you will be.
Final thoughts
The bond registration process in South Africa is fairly simple to understand. However, it is a lot to take in at the beginning. Do enough research, ask the right questions, and understand your responsibilities. Then you are one step closer to living in your dream home.