Bond Registration Process - What A Property Buyer Need To Know About The Process
Signing your bond documents can be a stressful and overwhelming exercise if you are a first time buyer as you are unfamiliar with the process.
A bond is registered over a property as security for the bank for the monies lent and advanced to the mortgagor (home loan applicant / property buyer).
After applying for the loan through a home loan consultant at a financial institution or through a mortgage originator, the property buyer (home loan applicant) will be presented by the mortgage originator with loan offers from different banks to accept.
Once you have accepted a home loan offer from a bank, the conveyancing process will kickstart.
Step 1 - Receipt of instructions from a bank
An attorney firm will receive an instruction, usually electronically, from the respective bank to attend to the registration of the mortgage bond on their behalf. On receipt of this instruction, the attorneys will contact the client and request certain information and documentation. The information and documentation are used to prepare the loan facility documents and the bond documents.
Step 2 - Preparation of documents
If a property transfer is involved, the bond registration attorney will request a draft title deed relating to the property purchased from the transferring attorney (conveyancer), issue guarantee requirements and obtain relevant FICA documents from the buyer (home loan client).
The attorneys will conduct a search of the Deeds Office records to verify the information and the property over which the bond is about to be registered and to check for any interdicts, insolvencies or other caveats that may be registered against the client or property.
If a further advance is involved, the bond registration attorney will obtain the title deed from the bank and prepare the bond documents for signature.
Step 3 - Signature of documents
Once the documents are prepared, the client will be contacted to arrange an appointment for signature. The documents to be signed will be the loan agreement, debit order mandate, cession of insurance, affidavits, and the power of attorney together with the bond that will be registered in the relevant Deeds Office.
It is important to note that the mortgagor has the right to choose an external insurer for their property that is about to be bonded or accept the insurance provided for by the bank. The bank will stipulate their prerequisites for adequate cover of the building by providing a replacement value of the property.
Step 4 - Guarantees and FICA
The transferring attorneys will comply with all the bank's pre-lodgement requirements and check FICA compliance. Once all the documents are signed by the client/(s) and submitted to the bank by the attorneys, the bank will verify the documents to ensure all securities and conditions have been met.
The bond registration attorney will advise the transferring attorneys that the bond documents have been signed. They will then send a guarantee, if requested, or advise the transferring attorney of the amount available under the bond, if the position to lodge or advise the transferring attorney of what is preventing them from lodging.
Step 5 - Lodgement of bond documents
Thereafter, the bond and transfer (if any) will be lodged at the Deed's office for the examination of the deeds. There are three levels of examination. The time for examination varies but currently it takes an average of 7-10 working days. Once the deeds have passed examination, the bond will become available for registration and the title deed will be endorsed. The conveyancer then has 5 days in total to register the bond.
If a further bond is involved, the bond is handed in for registration and registered on the following day. If a transfer is involved, the transfer and bond attorneys arrange the date of registration, within a 5 day period.
Step 6 - Registration
On the day of registration, the bond attorney arranges with the bank to have the bond proceeds paid and registers the bond with the other linked transactions. The transferring attorney is handed a cheque of the bond proceeds at the Deed Office.
If there is a guarantee, the transferring attorney will present it for payment after registration has taken place. The bank and clients are advised of registration.
In the case of a further bond, the bond proceeds are paid to the client in terms of the payment instructions.
Step 7 - Deliver of bond documents
Once the bond has been numbered and microfilmed, it is delivered to the bond attorney from the Deeds Office. This can take up to 3 months.
The bond attorney then obtains the title deed from the transferring attorney, if applicable, and delivers the title deed, bond and other security documents tot eh bank.
If no transfer is involved, only the bond documents are delivered the bank.