Issue 7 / April 2007
CAVEAT VENDITOR: LET THE SELLER BEWARE
Those of you in the property industry will be familiar with
the term “caveat emptor” – let the
buyer beware. But sellers would do well to familiarise themselves
with the ever changing mortgage environment and, in particular,
the pricing structure that banks apply to bonds.
For many years, the banks included a standard clause in
their bond documents in which they reserved the right to impose
a punitive cancellation penalty if you cancelled your bond
without giving them 90 days’ notice of your intention
to do so. The sale of bonded property always necessitates
a cancellation of the bond. There was a time when, notwithstanding
this clause, the banks turned a blind eye to it and seldom
recovered this penalty charge. More recently, their policy
has been that if you cancelled your bond within 2
years of registering it (or, in the case of Standard
Bank, within 3 years) the cancellation penalty would kick
in, unless you gave them 90 days’ notice.
It has now come to my attention that certain banks are imposing
this penalty regardless of how long the bond has been
registered. In other words, even if you've had your
bond for 10 years, you will need to give certain banks 90
days' notice when you sell your house, to avoid a penalty
which equates to 3 months' interest on the registered amount.
If your bond was registered for R800 000, the cancellation
penalty would amount to a whopping R24 000! If you're not
in a position to give the full 90 days' notice, but only,
say, 30 days' notice, your cancellation penalty will be calculated
on a pro-rata basis
The Bond Man has successfully motivated for the waiving of
this penalty in certain instances, but in general our experience
has been that the banks are applying the cancellation penalty
ruthlessly. As harsh as it may seem, the banks have a point.
Recent times have seen the market flooded with speculative
buyers who register bonds to secure the purchase of property,
only to cancel the bond within a few months (or less) when
they on-sell and turn a quick profit. The banks make no money
out of these bonds and will not be used as a short-term means
to an end by speculative buyers.
So even if youre just thinking of selling your property
within the next few months,
Contact THE BOND MAN
to ensure that the requisite notice is given and properly
recorded by the bank.
THE BOND MAN CELEBRATES THE OPENING OF THE ATLANTIC
The relocation of The Bond Man to the Atlantic Seaboard was
celebrated by a festive Bling Party in Green Point, attended
by about a hundred clients, friends & associates.
with Kay Proctor and The Bond Man are Peter Smith of Smith
Tabata Buchanan Boyes and Mike van Alphen of Absa Bank.
Blankenaar & Rob Moore of Life Residential
scrumptuous catering was laid on by Jenny of Catering
Bond Man and his barmen!
The Bond Man
Telephone: +27 (0)21 433 1060
Fax: +27 (0)21 433 1062
Mobile: +27 (0) 82 453 7374
204 Main Road, Sea Point