A Notarial Bond is a form of security for a creditor and is registered in the Deeds office (in Bulawayo or Harare). A Notarial Bond is registered over the movable property of a debtor that they have put up as security for the obligations that they have to the creditor in terms of the loan agreement, attested to by a Notary Public. Notarial Bonds are a means of credit diversification as it enables some of the marginalized groups to get access to credit. It is common cause that not everyone owns immovable property hence Notarial Bonds aid these groups of people as they can use their movable property to gain access to credit. Notarial Bonds are placed in two broad categories:
- General Notarial Covering Bond
- Special Notarial Covering Bond
WHAT YOU NEED TO KNOW ABOUT NOTARIAL BONDS
Prescription
A Mortgagee’s right to claim from the mortgagor in relation to a Special Notarial Covering Bond persists for a period of 30 years, n advantage for the creditor. These are not affected by the prescription of ordinary debts.
Registration Costs
The registration costs for the Bond are incurred by the Mortgagor, and are calculated against the value of the property in terms of a Tariff gazette from time to time.
Access to assets
The debtor offers their movable property as security, but remain with the use and enjoyment of their property, as long as they adhere to the payment terms of the loan. The creditor only gets access to the property in the event of default by the debtor.
Secure in Law
In the event of default by the debtor, the creditor may use the Notarial Bond as prima facie (on the face of it) evidence in Court to receive recourse in the Magistrate Court or High Court.
FREQUENTLY ASKED QUESTIONS ON NOTARIAL BONDS
A Notarial Bond is a form of security for a creditor and is registered in the Deeds Office. A Notarial bond is registered over the movable property of a debtor that they have put up as security for the obligations to the creditor in terms of the loan agreement.
Q: WHO CAN DRAFT A NOTARIAL BOND?
A: A Lawyer that is also registered as a Notary Public can draft a Notarial bond. This is exclusive work that can only be done by a Notary Public.
Q: CAN A NOTARIAL BOND BE REGISTERED IN RESPECT OF IMMOVABLE PROPERTY?
A: Yes – although a Notarial Bond can only be registered in respect of immovable property over which the owner does not have real rights but only personal rights. An example of immovable property that can be used is property which is owned under a Cession Agreement.
Q: WHY ARE NOTARIAL BONDS REGISTERED?
A: They are a way of ensuring financial inclusion, as not every owns titled immovable property.
A: Convenience created for the debtoras the property is not delivered to the creditor upon registration.
Q: ARE THERE DISADVANTAGES WITH NOTARIAL BONDS?
A: They rank lower than other forms of security – a Mortgage Bond is endorsed on Title Deeds to announce to the public that the property is encumbered and would need to be cancelled first before new actions were taken over the property, which is the converse of the level of security offered by a Notarial Bond.
A: Confers personal rights which are only enforceable against the parties and no one else.
Q: CAN A NOTARIAL BOND BE VARIED?
A: Yes. A consent to variation must be drawn up and signed to highlight that position. Where the Notarial Bond is in favour of a Company, a resolution needs to be drawn and signed to the extent of the variation.
Q: AFTER HOW LONG DO CLAIMS ARISING FROM NOTARIAL BONDS PRESCRIBE?A: The rights of a party to claim against a Notarial Bond lapses after 30 years.
