Understanding the bond registration process
The home-buying journey can sometimes seem endless. If you're with a bond originator like BetterBond, you'll have someone to hold your hand along the way but, at some point, the attorneys will step in - and things could get a tad intimidating. You'll want to stay ahead of the attorney process so that the transfer is trouble-free.
Once you've found that sweet place you want to call home, it's time to put in an Offer to Purchase (OTP). From there, things could get a little serious - there are countless clauses, lots of docs, and an ever-ticking clock - so you want to be sure that there are no hiccups or hidden disasters along the way. Here's how:
1. Don't drag it out and delay things
It's up to you to drive the transfer process forward, so make sure you do the following:
- Long before you put in that OTP, make sure you've been pre‑approved so you're in a better position to get that loan from the bank without any fuss or drama
- Always be honest and provide accurate info to avoid disputes later down the line
2. Getting your docs in a row
Start collating all necessary FICA and credit documents in advance so that they're in place when it finally comes time to sign. You'll need:
- Proof of residence
- A copy of your identity document
- Your income tax number
- Details of both marital and solvency status
- Details of how you're getting the transaction financed (proof of funds or loan pre‑approval)
Once your docs are handed over, the attorneys can draft the transfer documents for signature. Note to self: make sure all the info you provide is correct and up to date!
3. Understand the terms and legal talk
There's a ton of technical talk that might go over your head, so make sure you ask the right questions and understand all the terms:
· The 'Subject to bond approval' clause
- Bond approval may take time - it's thus built into the Deed of Sale agreement as a 'suspensive' condition. This simply means that until you've got your bond approved, the sale can't go ahead.
- Insufficient loan amount - Sometimes the bond you get may be lower than what you applied for. Again, there are suspensive conditions built into the transfer so that you have enough time to find additional funds.
- Unfavourable interest rate - this is a little tricky, because even if you get an interest rate you're not happy with, the suspensive conditions will actually be considered to have been met. So, you should actually add this into your OTP upfront, in case you don't get your ideal interest rate.
· The 'Lapsed Offer to Purchase'
- Offer lapses due to time - in most sale agreements there's a blank section that you can fill in to indicate how long the seller has to accept your offer, so make sure you put this in place.
- Offer is rejected - If the seller adds changes and special conditions to your OTP, it means the seller has 'countered' your offer, and has rejected the original offer. If you're not happy with the changes, then the OTP will lapse. If you both want to proceed, a whole new agreement will have to be put together.
- Both parties wish to proceed - if the seller accepted your OTP after the stipulated expiry date, it's at your discretion as the buyer to go ahead or not (SA law protects the purchaser!). You can waive the expiry date and go ahead with the deed! However, it could cause a dispute later down the line, so put it in writing or craft a new OTP.
· The 'Voetstoots' clause
- 'Voetstoots' is one of those untranslatable words, but it basically means 'as is'. It protects the seller from being responsible for defects which they were totally unaware of. These are called 'latent' defects - defects that are not visible to the naked eye. And it also protects them from defects that can easily be detected when viewing the property (known as 'patent' defects).
- Under SA law, the seller has to disclose all known defects on their property. This includes any 'abnormal' or unusual qualities to the property - like a dry wall installed where a solid one was, or a concrete slab used to replace wooden flooring, and covered by a carpet. They're not quite 'defects', but they need to be pointed out.
- If, however, the seller knew about the latent defect and deliberately said nothing, the seller won't be protected by the clause. Hard to prove, though, so always do a thorough home inspection before you commit!
· The 'Defects disclosure' document
- Your estate agent will make sure the seller completes a defects disclosure document, which details all the defects, plus any unusual or abnormal qualities - like the property being listed as a national monument, so you can't renovate without permission.
- If you accept the defects disclosure doc, make sure you acknowledge and sign the full list, and attach it as an annexure to your OTP. This will make sure you're both on the same page, and ensures transparency.
- If you discover any undisclosed defects or unusual qualities (and we don't mean treasure buried in the back garden!), and it's clear the seller knew about these all along, you can actually go to court and claim damages. Worst case scenario: you can cancel the transfer!
· Suspensive conditions
- These are really any conditions that need to be met, stipulated by either the buyer or seller, before the sales agreement can come into force, and the transfer process can begin. If the suspensive conditions are not met, the agreement is considered null and void - and it's back to the drawing board!
4. Know who's responsible for what
Both you and the buyer should get googling ahead of the transfer so you both know what lies ahead. Do your research, people! Here's basically what's required from you both:
· Buyer
- Do a thorough check of the property
- Make sure you secure a sufficient loan amount
- Submit all your docs in time
- Stick to the OTP timeline
· Seller
- Accept or reject the OTP in a reasonable period of time. This time period is specified in the OTP and must be adhered to
- Allow the buyer enough time to find funds if the loan amount is insufficient
- Disclose all defects
- Obtain certified compliance docs
- Give notice to tenants (if there are any)
- Pay any remaining/outstanding municipal bills, rates and levies
- Get a rates clearance certificate from the local council
Keep the dream alive by being a dream buyer: your estate agent and attorney will want to be your best friend, and you'll be moving into that gorgeous new home before you can say 'voetstoots'! You can calculate your bond and transfer costs here
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