Who Owns Your Home—the Bank, or You?

With the vast majority of homes being financed through the country’s biggest banks, the popular online debate around who owns a mortgaged home in South Africa continues.

While some would argue that the bank owns your home, the truth lies in two salient points:

1. The authority that you elect to take on as soon as the bond is transferred into your name; and
2. The all-important title deed.

As a homeowner, the important decisions related to your home are dictated by you—not the bank.

You have the power to decide whether you wish to renovate, extend, decorate, paint, update the landscaping, lease out the property, or even sell. You are also responsible for the maintenance, repairs and general upkeep of the property.

If you were to sell, the first proceeds of the property sale would go towards paying off what you still owe on your home loan. Anything over and above would be profits for you to keep.

Further to this, a crucial piece of evidence around homeownership hinges on the title deed.

The name on the title deed of a home is the legally recognised owner, and this can be verified through the Deeds Office. If you were to access the title deed of the property, you would clearly see your name on it as the official owner.

However, the bank’s name will also be listed on the title deed, not as the property owner, but as the holder of your mortgage bond. A homeowner will only receive their title deed once the home loan is paid off. The title deed will be kept by the lender or bank until the said home loan is paid off.

With the majority of South Africa’s homes (69% according to Lightstone’s latest statistics) still being financed through the banks, the term ‘homeowner’ supports the argument. When you purchase a home—bonded or not—you are automatically deemed a homeowner.

What is a title deed?

A title deed is an important legal document used to determine the ownership of a property (or piece of land).

When you purchase a property, a conveyancing attorney is appointed to transfer the title deed into your name, and you will need to cover the relevant fees related to the transfer. The transfer process usually takes about three months following the approval of the home loan.

Once the bond registration and transfer process has completed, the title document will then be registered at the Deeds Office, which can take up to three weeks to be finalised.

The title deed includes important information such as the homebuyers’ personal details, a description of the property, the property purchase price, the date when the property was last transferred, any factors that could restrict the sale of the property in future—for example, a home loan—and any restrictions that apply to the purchase of the property.

It also includes an official Deeds Registry Office seal to indicate that the deed has been recorded in the name of the owner, and the date.

In the case of joint property ownership, which is becoming increasingly commonplace, the title deed will also set out how much of the property is owned by each person.

If I default on my repayments, is the house still mine?

The common question of ‘who owns your home’ shines a spotlight on some South Africans’ misconceptions of homeownership. This misconception generally stems from the repossession process in which a bank can repossess and sell your asset, should you default on your home loan repayments.

However, while this is factually true, the repossession process creates a legal and administrative headache for the banks and is therefore viewed as a last resort—meaning that they will often be willing to work with the homeowner to find a way to help them repay their debt over time.

Homeowners in financial distress have access to the following avenues to avoid repossession:

• Rescheduling or restructuring your debt;
• Renegotiating your home loan term;
• Requesting a payment holiday;
• Rearranging your repayment agreement;
• Selling your home; and
• Accessing credit insurance.

Unbeknown to many, the local area municipality also has the right to foreclose and sell your home should you repeatedly default on rates and taxes, while the Body Corporate (in the case of sectional title properties) can opt to have the property attached and sold should you default on your levies over an extended period.

While the recourse for repossession is lengthy and will follow due processes, it is important to note that the banks aren’t the only ones with the power to do so. Protect yourself by paying all fees—on time, every time—and prioritising your financial wellness as a homeowner.

WRITTEN BY GAVIN LOMBERG

Gavin Lomberg is a home financing specialist.

While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein.  Our material is for informational purposes.