Page 15 - Robin Twaddle PTG 2017 Digital

HOME LOANS AND MORTGAGE BONDS

HOME LOAN AND MORTGAGE DISCLOSURE ACT (63 OF 2000)

A “home loan” is defined as a loan or advance by a financial institution to a person for
purposes of constructing, purchasing, renovating or improving a home against security of a
mortgage bond or other accepted form of security.

When mortgage finance is necessary, a suspensive condition will be included in the Offer
to Purchase setting out the specific terms under which the finance must be approved and
these conditions must be fulfilled on or before the time limit stated in the contract, failing
which the contract will lapse and be null and void and cannot be reinstated, even with
the agreement of the parties by means of signing an Addendum. A lapsed contract cannot
be reinstated. Due care should be taken to properly understand the conditions relating
to the Bond approval as once the mortgage bond condition and any other suspensive
conditions have been fulfilled a binding, enforceable contract comes into existence.
Financial institutions reserve the right to withdraw the approval should any new or
previously undisclosed facts emerge, or should there be a change in circumstances which
may prejudice the rights of the financial institution.

Taking into account the increase in the prime interest rate quoted by the financial
institutions, the facility in terms of the mortgage bond approval may be withdrawn in the
event that the banks find that their rights are prejudiced due to an increase in the bond
rate. The withdrawal of the approval does not affect the Seller’s rights to argue that the
transfer of the property should proceed as the suspensive conditions had been fulfilled,
which would place the purchaser in the position that the transfer would have to proceed on
a cash basis.

THE HOUSING CONSUMERS PROTECTION MEASURES ACT (95 OF 1998)

In terms of Section 18, no financial institution may advance mortgage bond finance
to enable the consumer to purchase or build a home unless the financial institution is
satisfied that the home builder is registered in terms of the Act and that the home is or will
be enrolled with the National Home Builders Registration Council. The financial institution
will impose a requirement that the necessary NHBRC Certificate be obtained prior to
transfer of the property when the building on the property is less than five years old.

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