Bond Cancellation as part of the Transfer Process

Category Seller Advice

There is often misunderstanding amongst Property Sellers when it comes to the cancelling of their Bond. Cancellation will occur once your bondholder (usually a Financial Institution) gets a request to cancel the loan from an attorney. Once the property is sold, your selected conveyancing attorney forwards instructions to your Bond holder to cancel your home loan.

Give your Bank a 90 day Termination Notice
Remember – you should notify your bondholder or bank before the actual sale of your home. Often the best time is to give notice once you place your home on the market as a 90 day notice period to cancel a bond is a norm for banks and if the bond is cancelled before the 90 day notice period and early termination fee will in all likelihood be payable.

In normal circumstances, a Bond cancellation happens when the home loan is either paid up or when the property is sold. The Cancellation Attorney obtains consent to the cancellation from the bank which holds the seller's bond. 

Lodgement at the Deeds Office 
Once all of the initial documentation has been signed and the costs have been paid, the transfer, new mortgage bond and cancellation bond documents as well as the likes of the Rates Clearance certificates, are prepared by the nominated attorneys for lodgement in the relevant Deeds Office. The package of bond and the property transfer documents are formally inspected by the Examiners at the deeds registry office.

If everything has been correctly prepared and there are no rejections, the documents normally go the Assistant Registrar and if all is in order they will duly come up for  Preparation phase, where they are issued to each Attorney to remove any “notes”, and then move into the Registration phase.

The process has many checks and balances and it usually takes two to three weeks for all to be checked, vetted, examined and prepared by the various Examiners, Assistant Registrars and attending Attorneys to check the documents before they are ready for Registration.

At this point, the buyer of the property needs to have the balance of the purchase price at hand and available, and the financial institution/banks attorneys will ensure they have the necessary bond amount available. If, for any reason, the Buyer is unable to make the necessary funds available, the Conveyancing Attorney will delay registration. This may only be delayed or postponed for a maximum of three (3) to four (4) days or else the deeds are subsequently “rejected” and will need to go through the process of being lodged again.

The buyer may then be placed on terms and given seven (7) days written notice to rectify this default. In normal circumstances its best to allow for around 3 months for the registration and transfer of the bond.  
Browse through our articles and explanations of the transferring of property, how to get a bond pre-approval, how mortgage bonds are registered, transfer duty changes, and questions frequently asked by property Sellers.

Related information and articles:

  • Process for the transfer of Property
  • Buying Bank Property
  • Buying Sectional Title Property

Author: Barry Davies

Submitted 30 Aug 16 / Views 1441