Explanation on early termination penalty

Any bond holder intending to sell or cancel their home loan should take heed of the following information.

When the home loan is granted the normal period that the client will take to repay the bond is 20 years and the prevailing bond rate at that time will apply. The Usury Act permits a bond holder to make payments in addition to the stipulated monthly instalment at any time.

However, should the bond holder wish to pay the full outstanding balance of the loan in one amount prior to the due date (the bond has to be in the books of the bank for 3 years), the following provisions will apply:

• The bond holder is required to give the bank 90 days notice in writing of the date the payment will be made.

• The notice may not be given before the expiry of a period of 90 days from the date when the loan was registered.
• The act clearly stipulates that the bank has the right to have an account on their books for a minimum period of 180 days from inception i.e. 90 days have to lapse after registration of the bond and then 90 days notice, which should be furnished to cancel the bond within the 3 year period.

This allows the bank to recoup some of their origination costs as a result of the potential interest income that will be lost. It takes anything up to 3 years before a loan becomes profitable to the bank.

The early termination fee is not a penalty imposed by the bank, but a recovery of interest income, which is specifically provided for in legislation.

Accounts to which early termination would apply:

• When a bond is cancelled within the first 3 years after registration with effect from 1 October 2001.
• All home loans with a fixed or capped interest rate agreement.

This allows the bank to recoup some of their origination costs as a result of the potential interest income that will be lost. It takes anything up to 3 years before a loan becomes profitable to the bank.

Process to determine finance charges debited to your home loan account:

• 90 Days interest is calculated on the outstanding balance at day of notice.
• The provisional figure is added to the outstanding balance together with other allowances such as insurance/assurance and admin fees, etc.
• On final cancellation, the unexpired portion of 90 days interest will be charged and debited to the bond account, and will be due by the bond holder.

Refund of early termination interest charged:

• Should the customer take out a new bond with the bank within 6 months of settling the previous home loan account, the client needs to advise the cancellation department of the new account number.
• The refund will not be considered until the new bond is registered.
  To avoid early termination – give 90 days notice!

This information may be valuable to investors as they often buy off-plan and sell on once the project is completed, which means they have not paid a single bond repayment and penalty interest will apply. So, take heed of the above information to avoid these costs, or make sure you factor the cost into your new sale price.

Please note: This information may vary from bank to bank and it is recommended that you check the rules with your bond consultant.

Chas Everitt Randburg Office
Tel: 011 801 2500
Website: http://www.everitt-randburg.co.za

Understanding The Difference:

Between The Attorneys Trust Account And Investment Accounts And How The Agent Can Play An Important Roll To Speed Up The Transfer Process

When the Purchaser is requested to pay a deposit into the Attorneys Trust Account, the Purchaser is given the option to invest the money. Why?

The money in the Attorneys Trust Account may accrue interest, this interest in terms of Regulation 8 of the Regulations under the Attorneys Act shall be paid to the Law Society and cannot be paid over to the Purchaser.

The Purchaser is offered the option of having their deposit moved from the Attorney’s Trust into a money market account (an interest bearing account), thus the interest earned can be paid over to the Purchaser. Purchasers are required to sign an indemnity form providing the attorney with the right to invest the money on their behalf. It is important for both agent and purchaser to realise that money cannot be invested on behalf of the Purchaser without a written “consent to invest” form signed by the purchaser. Please call our offices to provide you with an “consent to invest” form. We recommend that you have same as part of your Sale Agreement documents when your Purchaser’s offer is accepted by the Seller. Please explain that interest earned may fluctuate and a rate cannot be guaranteed.

The Banks are not allowed to invest the Purchasers deposit in their money market accounts without the consent form mentioned above and full FICA documentation due to requirements of the FICA Compliance Act. The agent can assist the Purchaser to invest their funds quickly by assisting the attorney in obtaining the Purchasers FICA documentation and have the “consent to invest” form signed when the Purchaser signs the Sale Agreement.

This article has been reprinted with the kind permission of Masilo Freimond Inc.
Tel : 011 958 0488
Fax : 086 610 0276
E-mail : info@masiloincjhb.co.za

Amendment of The Financial Centre Intelligence Centre Act

The Financial Centre Intelligence Centre (hereinafter referred to as ”the Centre”) is in the process of enhancing its operating systems in order to optimize its services.

It is now a requirement that due to an upgrade of the Centre’s website, estate agencies (indeed all accountable institutions) to use the following new forms (which forms are available on the website) when a report is being filed:

1. Suspicious Transactions Report (hereinafter referred to as “STR”)
2. Terrorist Property Report (hereinafter referred to as “:TPR”)
3. Cash Threshold Report (hereinafter referred to as “CTR”).

In addition an estate agency is now required to acquire new login credentials from the Centre in order for the estate agency to file reports in terms of the new systems. Please be advised that your existing log on credentials will expire shortly.

You are therefore advised to visit the Centre’s website: www.fic.gov.za in order to acquire new log on credentials and also to advise the Centre of the name and contact details of the compliance officer duly appointed.

Roll-Out of Cash Threshold Reporting Process
From the 1^st of December 2010 estate agents will be required to file a CTR with the Centre in order for the Centre to monitor cash transactions which can potentially be identified as proceeds of crime in order for the same to be investigated.

Definition of Cash
Cash is defined as coin and/or paper money and travelers’ cheques.

What is excluded from the Definition of Cash?  
Any negotiable instruments, transfer of funds by means of bank cheque, bank draft, electronic funds transfer, wire transfer or other written order that does not involve the physical transfer of cash.

The threshold for reporting is the sum of R25 000, 00 and above. This amount can be made up of a single cost transaction to the value of R25 000, 00 or an aggregation where multiples of smaller amounts would add to the threshold of R25 000, 00.

What is included?

1. Any cash payment received by the estate agent exceeding R25 000, 00 will have to be reported
2. Where an estate agent pays a client physical cash in excess of the threshold this amount will also have to be reported
3. An estate agent will be responsible for reporting cash in excess of R250 000, 00 in the event of the agent receiving cash on behalf of (for instance) a purchaser from a bank or other third parties.

If cash is received into the estate agency’s bank account then the reporting duty is on the estate agent and on the bank as well to report the cash transaction to the Centre.

The reporting duty arises when the agent becomes aware of the cash payment to the value of R25 000, 00 or more, i.e. when the agent physically receives the cash or paid out the cash or it peruses in its bank statement or it receives a bank deposit slip in respect of a cash transaction exceeding R25 000, 00 or more.

Electronic Method
The Centre has developed an electronic process, making use of an internet portal on its website facilitating the filing of a CTR.

Who is required to obtain login credentials?
It is clearly stated that each branch of an estate agency is regarded as a separate accountable institution and is required to acquire separate login credentials from the Centre. For example, if estate agency X has 40 branches throughout the country, then each individual branch will have to acquire separate secure login credentials i.e. 40 different login credentials will have to be acquired.

Should you need any additional information, please do not hesitate to contact the Dykes van Heerden team or alternatively, you can visit the Centre’s website on www.fic.gov.za.

This article has been reprinted with the kind permission of Dykes van Heerden.

Tel: (011) 279-5000
Fax: (011) 955-4799
E-mail: info@dykesvanheerden.co.za

Deeds Office Fees Increase from 01 September 2010

The Deeds Office fees are to increase from 1 September 2010 as set out in the Government Gazette of 27 February (No. 33413 Notice No. R659). These are the fees charged by the Deeds Registry in order to process the actual registration of a Mortgage Bond or Transfer and is levied as a disbursement payable by the Purchaser to the conveyancing attorney who on turn pays it to the Registry. The Deeds Office fees on Transfer and Bonds will be increasing with the exception of Deeds Office fees for Transfer below R150 000,00. The changes will be as follows:

How Are These Fees Changed?

Registration of Transfers	Prior to 01/09/ 2010	After 01/09/2010
Less than R150 000	R70, 00	R70, 00
Above R150 000 not exceeding R300 000	R300, 00	R350, 00
Above R300 000 not exceeding R500 000	R400, 00	R450, 00
Above R500 000 not exceeding R1 000 000	R500, 00	R550, 00
Above R1 000 000 not exceeding R2 000 000	R600, 00	R650, 00
R2 000 000 not exceeding R3 000 000	R800, 00	R850, 00
Above R3 000 000 not exceeding R5 000 000	R1000, 00	R1050, 00
Above R5 000 000	R1200, 00	R1 250, 00

 

Registration of Mortgage Bond	Prior to 01/09/2010	After 01/09/2010
Less than R150 000	R260, 00	R310, 00
Above R150 000 not exceeding R300 000	R300, 00	R350, 00
Above R300 000 not exceeding  R500 000	R400, 00	R450, 00
Above R500 000 not exceeding R1 000 000	R500, 00	R550, 00
Above R1 000 000 not exceeding R2 000 000	R650, 00	R700, 00
R2 000 000 not exceeding R3 000 000	R1000, 00	R1050, 00
Above R5 000 000	R2000, 00	R2050, 00

 

This article has been reprinted with the kind permission of Dykes van Heerden.
Tel: (011) 279-5000
Fax: (011) 955-4799
E-mail: info@dykesvanheerden.co.za

Public Sector Strike – It Does Effect All

What do the latest public sector strike negotiations mean for us?

Workers who have threatened to strike include customs and immigration officers, police, health care staff and teachers.

Perhaps you have heard of Congress of South African Trade Unions (Cosatu) and its affiliates baulked at public service sector wage offer increase of 7%. The Public Service Ministry said in a statement that it was prepared to increase salaries by 7%, after previously offering 6.5%. Its offer of a monthly housing allowance of R630 remained unchanged. The average wages in the private sector are moving in line with the inflationary and recessionary realities. Unions are demanding an increase of 8.6% – double the current inflation rate – and a housing allowance of R1 000, which would put pressure on the state budget.

Statistics from the central bank show that average monthly wages in the public sector are a whopping 43.6 percent higher than those in the private sector and therefore not in line with inflation nor the recessionary realities. Eskom had offered an 8.5% pay rise and a R1 000 per month housing allowance, but trade unions are seeking a 9% wage rise and a R2 500 allowance. Eskom have advised that the strike will have an impact on their ability to supply power. We all know the serious impact power failures have on our businesses. What about the transport systems, thus causing staff to have problems getting to and from work – again another strain on the private sector.

What does it mean for us, the Sellers, the Purchasers, the Agents and the Attorneys?

Our frustrations will rise – with Government sectors striking we will experience further delays with our transactions. Now not only with council and obtaining rates clearance figures. Other areas are also going to be affected. Think of:

• SARS and the obtaining of transfer duty receipts
• The Deeds Office and the actual registration of our valuable transfers

The effects of the strike are likely to be felt long after the strike is over as well, due to the back log which the strike will cause.

What can We as the Attorneys and Agents do?

We need to make our Sellers and Purchasers aware of how the strike action is and will affect their transfers. That way they will not be frustrated at the wrong parties for the delays experienced. Let’s be pro-active about our deals and more diligent about getting the necessary supporting documents in as early as possible, such as copies of rates accounts and income tax numbers. Let’s get our documents drawn and signed as early as possible – this means having all FICA documentation in – collect as much as possible when signing the Offer to Purchase.

This article has been reprinted with the kind permission of Masilo Freimond Inc.
Tel : 011 958 0488
Fax : 086 610 0276
E-mail : info@masiloincjhb.co.za

Rescissions of Judgement – What is it?

“When a debtor does not defend the actions instituted against them (a summons) this results in the court granting a default judgment and the debtor is blacklisted.

So how  does the person get “unblacklisted” (the judgment rescinded)? Only by a court order – where the common law requirements and the provisions of the court rules are met and defaults rectified.

You are only entitled to apply for the rescission of Judgment that was granted against you if whoever blacklisted you consents thereto in writing or, failing that you can show that at the time of judgment you were not in willful default and you had a valid and bona fide defense to the action instituted against you.

If you get consent it is a simple matter to set aside judgment – your attorney brings a substantive application to obtain a rescission and the cost is approximately R1500 plus VAT for your attorneys services.

What happens if you don’t or can’t get consent?

You need to show the court that at the time of judgment you were not in willful default and had a valid and bona fide defense to the action instituted against you.

So what is Willful Default?

Before a person can be said to be in willful default, he must have known that action was being brought against him and deliberately ignore and not defend himself because he could not care less about the consequences of not dealing with the matter. PLEASE bear in mind that at present, the rules of the court do not require a summons to be personally served to yourself – it can be given to someone else on your behalf or merely fixed to the address which you declared your domicile address.

So what is a Bona fide defense?

Once you satisfied the court that you were not in willful default in allowing the judgment against you, you must demonstrate to the court a substantial defense. Was the judgment made in error? How? Did you make right with the party who blacklisted you?

In conclusion –  A Court has an inherent power to control the procedure and proceedings in its Court thus enabling litigants (the Creditors) to resolve their differences in as speedy and inexpensive a manner as possible. Judgments are there to protect the Creditors against bad Debtors.  Therefore a judgment is seldom placed to against a person without just cause. It is the Courts way of bringing a successful conclusion to a dispute between a Creditor and a Debtor. “

This article has been reprinted with the kind permission of Masilo Freimond Inc.
Tel : 011 958 0488
Fax : 086 610 0276
E-mail : info@masiloincjhb.co.za 

Advantages of Solar Power

Although solar power is a relatively new energy source, it may very easily become the most important energy source of our time and also, the future. The advantages of solar power are far-reaching and below are some of them:

• Solar power is a renewable resource, meaning that we are not in danger of depleting its reserves. Though it may disappear behind clouds momentarily and is unavailable at night, it generally returns in full force.
• The energy and heat from the sun is free. Once solar panels or solar thermal collectors are set up, there are no electrical expenses necessary to power them, meaning no unpleasant bills come the end of the month!
• Solar power is non-polluting. Unlike oil, solar power usage does not emit any greenhouse gases, nor does the acquisition of it harm ecosystems through spills or dredging. This is probably one of the primary advantages of solar power.
• Solar cells require very little maintenance, mostly because there are no moving parts that must be maintained.
• Solar cells can last a lifetime.
• In remote locations, solar power may be a more realistic energy option than running large lengths of electrical wires to connect to a grid.
• Solar power is incredibly versatile. A variety of inventions may be powered by it, including cars, water heaters, fountains, buildings, and satellites.

Overall, it seems that solar power is simply a more harmonious energy resource. To obtain other energy sources, there is a requirement of harvesting fossil fuels, animal matter, or plant matter. This is a great source of energy, not only because it is much healthier for all, but all in all it is also more reliable, not having to stress about black-outs and load shedding and even if we’re not using the energy it provides, the sun will come up again tomorrow and everyday after that.

Along with the advantages of solar power, it is worth remarking upon the disadvantages. These include sunlight not being a readily available resource in some areas of the world. Also, solar cells are still not particularly cheap. Of course, technology for this is improving, and it will continue to improve as the cost of other forms of power increase.

What can they do?

Solar panels can heat your swimming pool, your geyser, and in certain cases, depending on your annual energy expenditure, even power your entire house. Solar panel use in an average home will reduce annual energy costs by around 75%, largely paying for the installation, and with energy production that will only decrease generally 25 years after purchase to 80% of its peak level you have many years before replacement will be necessary. (This is referred to as the longevity rating, and there are varying degrees for different manufacturers and types of solar panels.)