PENALTY INTEREST ON CANCELLED BONDS
Absa have advised that from the 1st of March 2008 a penalty interest will be charged in respect of all their bonds which are cancelled if less than 90 days notice is given that the seller intends to cancel his mortgage bond, i.e. if the seller gives 30 days notice before the bond is cancelled the seller would then be liable for 60 days' penalty interest. This will either mean that sellers will not allow their transactions to be registered until the 90 day period has expired or that the sellers will have to pay some penalty interest in respect of any Absa bond which is being cancelled.
One therefore has to seriously consider whether your sellers should be advised to give notice to Absa of their intended cancellation of the mortgage bond as soon as it seems likely that the property will be sold in order to ensure that the transfer is not delayed as a result of having to wait the full 90 day period after the attorney has given notice to the bank. If you require assistance in regard to such notice of cancellation you are welcome to contact one of the directors. We emphasize however that one must take care in giving such notice as in theory if the property is not sold, the bank can still insist that the bond be settled after the 90 day period.