In an economic climate like this, the risk of losing your house is greater than ever before and paying the mortgage every month is something that forces homeowners to tighten their belts a bit.
We hear a lot about mortgage defaults and home repossessions, but failing to pay your home installments is only one of the ways that could cause your home to become attached and auctioned off!
There are several other ways that you could lose your home besides not paying your bond.
Here are 5 ways that you should be cautious of:
Way #1 – Failing to pay your taxes
Your local authority can go to court and get a debt judgment against you if you do not pay your property rates.
Even though this is usually a last resort, SARS can also have your property attached if you don’t pay your income tax.
There are large penalties involved when it comes to skipping property rates, and even if you can reach an agreement, the sum that you have to pay back will definitely hurt you.
You also can’t escape your tax liabilities by selling your home. The municipality won’t issue a clearance certificate and SARS will take a percentage of the profit you make on the house.
Way #2 – Failing to pay your monthly sectional title fees
The body corporate of your sectional title complex (or the HOA of your estate) can legally have your unit attached and sold off to settle arrear levies, even if you have a bond on the property and have been paying your installments.
The bank will get any proceeds of the sale that is left over after the levy arrears have been paid and you will still be liable to pay a portion out of your home loan.
Way #3 – Applying for voluntary sequestration (aka filing for bankruptcy)
If your home is registered in your name, it is seen as an asset.
When your estate is declared insolvent, a board of trustees will be appointed by the court and they will be obliged to sell it to try and receive at least the amount outstanding on your home loan.
If you do not have a loan, the home will be sold as a means for them to cover any outstanding debt that you might have.
Way #4 – Standing surety for someone else’s debt
If the other person or business defaults in these cases, the creditors will be entitled to come after you personally.
They might also attach your private assets to settle any debts that you might have and there is a very real possibility of you losing your home.
For this reason, you should be very cautious of ever acting as surety for someone else, even if it is your own children or your parents.
Way #5 – Engaging in illegal activities
If a home is bought with money that has been made illegally or through illegal activities, it is legal for a court to repossess your house.
No real surprise there, right?
The South African Law clearly states in Chapter 6 of the Prevention of Organized Crime Act that the National Public Prosecutor holds the legal power to apply for any type of property that is used in the commission of crime or believed to have been purchased with the proceeds of crime so that the property can be attached and forfeited to the State. This might also mean that you could face serious penalties for running illegal operations.
Losing your home doesn’t stop at missing out a few installments. It can get legal and complicated, so rather be safe than sorry.