PROPERTY
NEWS HEADLINES
"One of the most common financial surprises sellers encounter is the concept of bond cancellation fees'" says Colin Fibiger, CEO of Property Network, "but these can largely be avoided."
When one sells a home and has an existing bond, this bond has to be cancelled and there are fees connected with this. Firstly the bank will charge a cancellation fee and secondly a penalty for early cancellation.
"Perhaps
the reason that homeowners are shocked by this surprise fee on their
account is that in the normal course of business, clients are
accustomed to receiving a discount for early settlement and being
penalised is the last thing they expected," says Fibiger.The standard cancellation fee is normally just under R1000 and varies from bank to bank. This is to all intents and purposes an administrative fee which covers the costs of cancelling the bond at the deeds office and is unavoidable.
"Clients can however avoid early cancellation penalties by giving sufficient notice to the bank," says Fibiger, "and most banks presently will waive penalties if 90 days notice is given."
"A problem arises when a sale is taking place and the conveyancing attorneys only advice the bank of the intent to settle and cancel once the purchasers bond is approved," he says. "At this point in the transaction, registration is probably going to take a maximum of another 60 days leaving the seller 30 days short of the bank notice requirement and therefore due for penalties."
Property Network advises all clients to give notice to their bank at the time of signing the mandate and has a standard form which is uses for this to assist their clients.
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