Legal Articles

Behind the gentleman in tuxedos, is a man who always gets the job done. James Bond is agent 007, a fictional character in the James Bond franchise movies, the most successful in British history. 

James Bond has become synonymous with taking the undesirables of his world to their graves. He is an assassin par excellence who kills people, he kills operations of criminal syndicates, he kills just about anything and anyone in his way. In fact, as they put it, he has a license to kill. 

Shared Bond with Deceased Spouse

What if death visits one of the parties on a joint mortgage bond? Worse still, what if the mortgage bond is not yet settled? What happens to you, what happens to their share on the bond, what happens to everything?

The Deceased’s Share

Assets fall into the deceased estate when someone passes away, for distribution to the heirs of that late estate. With regards to a bond which has not been settled in full as yet, ownership rights on the property are not fully manifest and therefore such share interest will not vest into the deceased estate in toto.

Even if one of the heirs would prefer “inheriting” the position of the deceased on the joint bond, it would still not be of effect if they do not qualify as per the bank’s qualifying criteria and creditworthiness assessments. On the other hand, if the remaining party chooses not to “partner” the incoming heir on the bond, there isn’t much that the heir can do and it may result in the property being sold to cover the bond balance.  

The Bond

Where one of the parties on a joint bond passes away, the remaining party has options to consider.

1. Bring in another party to replace the party who passed away;
2. Go it alone and enter into a new agreement with the bank/lender;
3. Have a surety sign a guarantee as co-bond holder on the mortgage bond;
4. Have the property sold and the bond balance settled.

In the first and second options above, a process called substitution must take place. This involves the replacement of the deceased or former joint bond holder, after the bank/lender has assessed the affordability of the remaining party and/or the new party to replace the deceased/former joint bond holder.  

There are costs involved in this process.

The same process happens where the parties were involved in a relationship and having separated, now require that the other be removed from the bond. It can even be where spouses on a joint bond have divorced and one spouse has to be removed from the bond either by mutual agreement or by Court Order.

Life Insurance

Certain banks require life insurance when taking out a bond, meaning that in the event a party passes away, the outstanding bond amount will be settled by the life insurance. It will be important to ascertain whether life insurance which has been ceded to the bank exists. Alternatively, if you are taking out a bond with a co-owner and life insurance is not a requirement, it is still a good option to take out your own cover to ensure that the remaining partner is not left with a large debt over the property which they may not be able to afford on their own.

Van Deventer & Van Deventer Inc. - Attorneys and Conveyancers South Africa

Within our group we have Phoenix Bonds which specialises in bond origination and bridging finance. They assist home buyers to get mortgage bonds with better terms and conditions from banks/lenders.

At Van Deventer & Van Deventer Incorporated we assist with transfer of property within our fully fledged Conveyancing Department.

Contact us for comprehensive assistance.

The information and material published on this website is provided for general purposes only and does not constitute legal advice. We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. Please consult one of our lawyers on any specific legal problem or matter. We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained in these pages.