When a property is sold and the seller has an outstanding bond, the bank must be notified of the seller’s intention to cancel the bond. If the seller hasn’t notified the bank prior to the sale, the conveyancing attorney will handle this notification. Banks require a 90-day notice for early settlement.
The bank instructs the cancellation attorney to manage the cancellation, providing the attorney with the exact cancellation figure, which includes:
– The month-end balance prior to issuing cancellation figures.
– 90 days’ interest (if applicable).
– Homeowner’s insurance premiums that would be debited to the bond account over the next six months (to ensure the property remains insured until transfer).
– Credit life assurance premiums that would also be debited for the next six months (to maintain life assurance until transfer).
– All associated legal costs, interest, and/or early settlement charges.
The seller’s conveyancer will issue the bond cancellation attorney a guarantee confirming that the outstanding bond and any cancellation penalties will be paid to the respective bank through their attorney upon registration in the deeds office.
If the bank receives more than the necessary amount to settle the seller’s home loan, it will refund the excess a few days after registration.
Upon registration, the title deeds will be held by the purchaser’s bank until the purchaser decides to settle the bond.
If a homeowner wishes to cancel their bond without selling the property, they may do so. The same cancellation process applies, but the title deed will be returned to the homeowner once the bond is lifted from the title deed in the deeds registry.