Can You Transfer a Property If the Seller Has an Outstanding Bond? | Barter McKellar

When buying or selling a property in South Africa, one common question is: Can the property be transferred if the seller still has an outstanding home loan (bond) on it? The short answer is yes, but the existing bond must be cancelled before the transfer can be finalized at the Deeds Office.

At Barter McKellar, we specialize in property law and conveyancing, ensuring smooth property transfers even when a bond cancellation is required. In this guide, we explain how to cancel an outstanding bond, what delays can occur, and how to ensure a hassle-free transfer process.

1. Can a Property Be Sold If There Is an Outstanding Bond?

Yes, a property can be sold even if the seller still owes money on the mortgage. However, the outstanding bond must be settled and cancelled before the property can be legally transferred to the buyer.

Key Points to Remember:

✔ The seller’s bank must approve the bond cancellation before transfer.
✔ The conveyancing process cannot be finalized until the bond is cancelled.
✔ The seller must pay any outstanding loan balance before the bond can be removed from the Deeds Office.

If the property is being sold for more than the outstanding bond amount, the proceeds from the sale will be used to settle the loan. If the sale price is lower than the outstanding bond, the seller will need to cover the shortfall before the transfer is completed.

2. How Does Bond Cancellation Work?

Step 1: Request a Bond Cancellation Statement from the Bank

The seller must request a bond cancellation statement from their bank, which will provide:
✔ The outstanding loan balance.
✔ Any early settlement penalties or administrative fees.
✔ The bank’s requirements for bond cancellation.

Most banks require a notice period of 90 days for bond cancellation. If the seller does not provide sufficient notice, the bank may charge penalty fees for early settlement.

Tip: Sellers should notify their bank as soon as they decide to sell to avoid unnecessary costs.

Step 2: Appoint a Bond Cancellation Attorney

A bond cancellation attorney (appointed by the seller’s bank) will handle the legal cancellation of the bond at the Deeds Office.

✔ The bank will instruct the bond cancellation attorney to prepare the necessary documents.
✔ The attorney ensures that the bond cancellation coincides with the property transfer.
✔ Once the seller has settled the outstanding balance, the attorney will lodge the bond cancellation documents at the Deeds Office.

Tip: The seller is responsible for the bond cancellation attorney’s fees, which are separate from the conveyancing costs.

Step 3: Settlement of the Outstanding Loan

Before the transfer can be registered, the seller’s bond must be fully settled.

✔ If the sale price is higher than the bond balance, the bank will be paid directly from the proceeds of the sale.
✔ If the sale price is lower than the bond balance, the seller must settle the remaining amount personally before cancellation can proceed.

Tip: Sellers should review their bond settlement terms with their bank to ensure they have sufficient funds to cover any shortfall.

Step 4: Lodgement at the Deeds Office

Once the bond cancellation is ready, the following documents are lodged at the Deeds Office for registration:
✔ The bond cancellation documents (submitted by the bond cancellation attorney).
✔ The property transfer documents (submitted by the conveyancing attorney).
✔ The new bond registration documents (if the buyer is taking out a home loan).

All these documents must be registered simultaneously to ensure a seamless transfer of ownership.

3. How Long Does Bond Cancellation Take?

The bond cancellation process usually takes 6 to 8 weeks, but delays can occur if:
✔ The seller does not provide the 90-day cancellation notice to the bank.
✔ There are delays in obtaining the bond cancellation figures from the bank.
✔ The seller does not settle outstanding amounts on time.
✔ The Deeds Office experiences backlogs, slowing down the registration process.

Tip: Sellers should start the bond cancellation process as early as possible to avoid transfer delays.

4. Costs Involved in Cancelling a Bond

The seller is responsible for all costs related to the bond cancellation process, including:

✔ Bond cancellation attorney fees – Charged by the attorney handling the bond cancellation.
✔ Bank administration fees – Charged by the bank for processing the cancellation.
✔ Early settlement penalties – If the seller did not provide 90 days’ notice to the bank.
✔ Interest on the outstanding bond – Until the bond is fully settled.

Tip: Sellers should request a breakdown of all bond cancellation costs from their bank and attorney in advance.

5. How to Avoid Delays in Property Transfers Due to Bond Cancellation

For Sellers:

✔ Notify your bank early – Provide at least 90 days' notice to avoid penalties.
✔ Settle outstanding amounts on time – Ensure the loan is cleared before transfer.
✔ Appoint an experienced bond cancellation attorney – To handle the process efficiently.
✔ Work closely with your conveyancer – To ensure that bond cancellation aligns with property transfer.

For Buyers:

✔ Confirm with the seller that bond cancellation has been initiated.
✔ Work with a conveyancer to monitor the transfer timeline.
✔ If delays occur, negotiate an extension with the seller if necessary.

Tip: Choosing an experienced conveyancing attorney can help coordinate the process and ensure a smooth transaction for both the buyer and seller.

Why Choose Barter McKellar for Your Property Transfer?

At Barter McKellar, we specialize in property law and conveyancing, ensuring that bond cancellations and property transfers are handled efficiently. Our team of expert conveyancers will:

✔ Liaise with the seller’s bank to facilitate bond cancellation.
✔ Ensure all legal documentation is correctly prepared and lodged.
✔ Minimize delays in property transfers due to outstanding bonds.
✔ Provide expert guidance to both buyers and sellers throughout the process.

Whether you’re buying or selling a property, we offer personalized legal support to help you navigate the bond cancellation and transfer process smoothly.

Need Help with a Bond Cancellation? Contact Us Today!

If you’re selling a property and need assistance with bond cancellation or a property transfer, contact Barter McKellar today for expert legal support.