Can You Cancel or Amend a Special Notarial Bond? A Guide for Borrowers and Lenders | Barter McKellar

Special notarial bonds are a popular legal tool in South Africa for securing loans with movable assets, benefiting both borrowers and lenders. However, circumstances may change and borrowers may wish to cancel or amend the bond, especially if they repay the loan early or need to adjust the terms of the agreement.

At Barter McKellar, we specialize in drafting, registering, amending and cancelling special notarial bonds. This guide provides a step-by-step overview of the process for cancelling or amending a special notarial bond, ensuring both borrowers and lenders understand their rights and obligations.

What is a Special Notarial Bond?

A special notarial bond provides security over specific movable assets, such as machinery, vehicles or equipment, in favor of a lender. It allows the borrower to retain possession of the assets while giving the lender a real right over them if the borrower defaults. The bond is registered at the Deeds Office, making it legally enforceable.

Can a Special Notarial Bond Be Cancelled or Amended?

Yes, it is possible to cancel or amend a special notarial bond in South Africa, but certain legal requirements must be met to ensure the process is handled correctly. The bond must remain registered until the debt is fully settled or both parties agree to amend its terms.

Below, we outline the steps for cancelling and amending a special notarial bond.

How to Cancel a Special Notarial Bond

Cancellation is necessary when the borrower has repaid the loan in full or if the lender agrees to release the borrower from the bond obligation.

Steps to Cancel a Special Notarial Bond:

Step 1: Obtain the Bondholder's Consent

Before the bond can be cancelled, the lender (bondholder) must provide written consent confirming that the debt has been repaid and they agree to release the borrower from the bond. The lender will issue a cancellation instruction, which outlines the bond details and confirms the loan's settlement.

Step 2: Prepare a Cancellation Document

A notary public will draft the cancellation document, which confirms that the bond is no longer in effect. This document must be signed by both the lender and the borrower in the presence of the notary.

Step 3: Lodge the Cancellation Document with the Deeds Office

The cancellation document must be lodged at the Deeds Office where the bond was initially registered. The Deeds Office will remove the bond from the public record.

Step 4: Pay Cancellation Fees

There are Deeds Office fees associated with lodging the cancellation. The notary public will assist with calculating the fees and ensuring they are paid.

Step 5: Receive Confirmation of Cancellation

Once the Deeds Office processes the cancellation, the bond will no longer appear on the borrower’s credit record or asset register. Both the borrower and lender will receive official confirmation of the bond's cancellation.

Why Cancel a Special Notarial Bond?

• Early Loan Repayment: Borrowers who repay their loan before the due date can cancel the bond to free their assets from any encumbrances.

• Asset Sale: If the borrower wants to sell the secured assets, the bond must be cancelled to transfer ownership without restrictions.

• Business Reorganization: Companies restructuring their finances may choose to cancel bonds to secure new financing or streamline operations.

How to Amend a Special Notarial Bond

In some cases, the bond may need to be amended rather than cancelled. This typically happens when the borrower or lender requires a change in the terms of the agreement or if additional assets are added as security.

Common Reasons to Amend a Special Notarial Bond:

• Extending the Loan Period: If the borrower needs more time to repay the loan, the bond terms may be adjusted.

• Adding or Removing Secured Assets: Businesses may buy or sell equipment, requiring changes to the assets listed in the bond.

• Adjusting Loan Amounts: If the loan amount is increased or reduced, the bond must be amended to reflect the new terms.

Steps to Amend a Special Notarial Bond:

Step 1: Agreement Between Lender and Borrower

Both parties must agree in writing to the changes being made to the bond. This agreement will specify the amendments, such as adding new assets or extending the repayment period.

Step 2: Draft the Amendment Document

A notary public will draft an amendment document, detailing the changes to the original bond. The document must be signed by both the borrower and lender in the presence of the notary.

Step 3: Lodge the Amendment at the Deeds Office

The amendment document must be lodged at the Deeds Office, where it will be recorded alongside the original bond. This ensures that the changes are legally binding and enforceable.

Step 4: Pay Amendment Fees

The borrower may be required to pay fees associated with amending the bond. The Deeds Office charges a fee for registering the amendment, and the notary public may charge a fee for drafting the documents.

Step 5: Receive Confirmation of the Amendment

Once the Deeds Office processes the amendment, both parties will receive confirmation that the bond has been successfully updated.

Important Considerations for Cancelling or Amending Special Notarial Bonds

• Lender's Consent is Required

In both cancellation and amendment processes, the lender's written consent is essential. Without this consent, the bond remains in effect and the borrower cannot make changes unilaterally.

• Accurate Asset Descriptions

If assets are added or removed during an amendment, they must be accurately described to avoid any disputes. This ensures that the bond remains valid and enforceable.

• Legal Compliance

Working with an experienced notary public ensures that all documents are drafted correctly and meet the legal requirements for registration at the Deeds Office.

How Barter McKellar Can Assist with Cancelling or Amending Special Notarial Bonds

At Barter McKellar, we offer expert legal services to assist borrowers and lenders with the cancellation and amendment of special notarial bonds. Whether you need to cancel a bond after early repayment or amend the bond to reflect new terms, our team of experienced notaries and attorneys will guide you through the process efficiently and accurately.

Why Choose Us?

• Experienced Notary Services: Our team of qualified notaries ensures that all documents meet the legal requirements for registration and enforcement.

• Tailored Legal Solutions: We provide personalized advice based on your unique circumstances, ensuring that your interests are protected.

• End-to-End Assistance: From drafting the necessary documents to lodging them with the Deeds Office, we handle the entire process for you.

Contact Barter McKellar Today

If you need assistance with cancelling or amending a special notarial bond, contact Barter McKellar today. Our experienced legal team is here to guide you through the process and ensure your bond is handled efficiently and correctly.