After your bond is paid up on commercial and industrial property in South Africa, the bond does not automatically cancel itself in the Deeds Office. You must initiate a formal, statutory process to remove the bank's encumbrance from your property title deed. Here is what happens in the process and the actions required:1. The Cancellation Process (Steps to Take)
- Notification: You must notify your bank in writing of your intention to cancel the bond.
- Notice Period: Banks generally require a 90-day notice period to avoid penalty interest, even if the bond is already paid up.
- Appointment of Attorneys: The bank will appoint a cancellation attorney from their panel to handle the removal of the bond at the Deeds Office.
- Documentation: You will need to provide FICA documentation and sign the necessary papers with the cancellation attorney.
- Costs: While the bond is paid off, you will still be liable for the cancellation attorney's legal fees for the Deeds Office registration.
- Title Deed Release: Once the cancellation is registered at the Deeds Office (which can take up to 3 months), the original title deed, now free of any bond endorsements, is released to you.
2. Immediate Post-Payment Checklist
- Cancel Insurance: If your Home Owners Comprehensive Insurance (HOC) was paid via your bond account, you must instruct the bank to stop these payments and arrange to move the premium to your own account, or get your own insurance, to ensure the building remains covered.
- Check for Refunds: If you overpaid during the final settlement, the bank will refund the excess funds into your nominated account.
3. Alternative: Keeping the Account Open
- You have the option to keep the account open instead of cancelling it. This allows you to retain access to further lending, which can be useful for future business funding (such as renovations or purchasing another property).
- If you keep it open, you may still pay a small monthly service fee, but you will not pay the attorney fees for cancellation.
4. Important Considerations
- Don't Assume Auto-Cancellation: The misconception is that settling the debt automatically clears the title deed. The bond remains an endorsement against the property until the cancellation is registered.
- If the Property is Sold: If the property was sold, the cancellation attorney works with the transfer attorney to register the cancellation simultaneously with the new transfer.
