With the rescission going on, a lot of people will be in the unfortunate position of getting their assets repossessed. The two assets that are always at risk of getting repossessed due to non-repayment are usually the car and house. In this article we look at the legal aspect of property repossession and what the process entails.

According to www.lawyersouthafrica.co.za repossession laws in South Africa are based on the provisions that should a borrower default in payment, the credit provider is entitled to cancel the agreement, repossess and sell the house in order to recover the outstanding balance owed to them.

Before a home can be repossessed the following process will usually take place:

•  The bank contacts the debtor by phone or in writing once there is default in the repayment of the monthly bond amount.
• The bank discusses the situation with the debtor and gives them a number of options including catching up with the arrears, undergoing debt counselling or trying to sell the property.
• Should the bank come to the conclusion that none of the proposed options will resolve the issue, the bank forecloses?
• Some banks in South Africa offer clients assistance to sell their homes on the open market before they foreclose.
• The bank will asks its legal department to acquire a legal summons from the High Court or a Magistrate (depending on the amount of the property).
• The summons is delivered to the creditor in person by a court-appointed sheriff.
• The bank then needs to formally apply for the right to auction off the property. This is done in court where a judge determines whether legal and fair processes have been followed.
• Once the property is sold, the money received will be used towards covering the outstanding loan amount and costs. Whatever remains will be paid to you.

What other options can the bank give a creditor before repossessing their home?

In the some cases the bank may offer a debtor a “payment holiday”, so as to allow the debtor to get back on their feet. They may also be so “cooperative” to even renegotiate the terms of the contract by either lowering their interest rate or increasing the length of the payment contract.”

Before panicking and changing your telephone details trying to get away from your creditors, it may be a good idea to consult an attorney or your legal insurance provider about what your options are. You just might find that a solution available is simpler than losing your hard earned property.

Tip:

• Contact your bank before they contact you if you have missed payments.
• Once a section 129 notice is issued, you literally have 10 days to apply for debt review, avoid delays
• You can only be evicted from a house sold on auction when the property has been transferred to a new owner.  If you are evicted before a transfer has taken place it is illegal.