Janine Julies
South Africans are known to be joyful givers and have proven this over and over again, as can be seen by the funds raised for the medical expenses of the late Dr Sindi van Zyl and, more recently, the funds raised for Big Brother Mzansi housemate Themba Mabaso.
Preventing the auctioning of Zahara’s house will, however, take a little more than only crowd funding as there are usually many expenses relating to owning a house, including taxes and services owed to a municipality, insurance on the building itself, possible homeowner association fees and more.
The position that Zahara finds herself in is the same for many homeowners. Covid-19 is still taking its toll on the jobs and livelihoods of many; families do not know how to save their homes in the face of changing financial circumstances. There are, howeve,r a few options on how to create temporary financial relief and possibly save one’s home.
Zahara and other homeowners who are in financial trouble can speak to registered financial service providers such as the banks where their existing home loans are held. Together with the bank, the homeowner can investigate different loan options such as a pledge or a notarial bond, an indemnity bond, a surety bond, or a collateral bond, while they make plans to generate additional income.
A pledge is a contract whereby the owner hands over movable property such as a car or machinery or equipment and receives money from a loan, in return. The owner of the movable property will receive that property back once the loan is repaid.
A notarial bond can be registered by a specialist attorney, called a notary, over movable property such as a car or equipment in exchange for the loan funding. In this case, the property usually remains with the property owner and the owner can still make use of his property while repaying the loan. If the property owner fails to repay the loan then the holder of the notarial bond can claim the movable property in order to sell it and obtain the money back.
Financially distressed homeowners can also ask a friend or relative to stand as surety for their home loan. In return, the homeowner can register an indemnity bond in favour of the person who stood surety. This is a way to protect the person who stood surety. This indemnity bond is registered over property that the homeowner already owns.
A surety bond can also be registered by a notary who is a specialised attorney. This bond is registered on the immovable property or house of another person as security and as a promise that the financially distressed homeowner will eventually repay his/her home loan. A friend or relative can provide this additional security to the bank.
Another option is a collateral bond that is registered by a notary over any additional immovable property or another house that the financially distressed homeowner already owns. This will provide the bank with the assurance that should the homeowner default on the repayments of there existing home, there will be enough other property that the bank can claim, to ensure that the home loan is repaid.
It is important that homeowners discuss these and other options with registered banks and financial services companies, in order to get the best advice on how to save their homes during financially distressing times.
Cape Times