There’s more than one way to have your home repossessed
When times are tough and consumer budgets are under pressure we hear a lot about mortgage defaults and home repossessions. The fact is, however, that failing to pay your home loan instalments is actually only one of several reasons why your home could be attached and auctioned off.
Berry Everitt, CEO of the Chas Everitt International property group, says homeowners also need to avoid these five hazards:
Failing to pay your taxes
“Your local authority can go to court and get a debt judgment against you if you don’t pay your property rates, and although it is usually a last resort, SARS can also have your property attached if you don’t pay your income tax,” explains Everitt. “There are also hefty penalties for not paying tax, so even if you can reach an agreement to pay off the debt and prevent your home from being auctioned, it is likely to cost you a lot more than the original tax bill.”
What is more, you can’t escape your tax liabilities by selling your home. The municipality will most likely not issue a clearance certificate to finalise a transfer to a new owner unless all rates and service charges due by you have been paid. And SARS is entitled to take whatever percentage of the sale proceeds is required to pay off any outstanding income tax amounts.
Not paying sectional title levies or home owner’s association dues
The body corporate of your sectional title complex or the HOA of your estate can 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 home loan instalments.
“The bank will get any proceeds of the sale left after your levy arrears have been paid and you will still be liable to pay any outstanding portion of the home loan,” cautions Everitt.
Applying for voluntary sequestration
If your home is registered in your name, it will be considered as an asset in your insolvent estate, and the trustees appointed by the court will be obliged to sell it to try to realise at least the amount outstanding on your home loan or, if you don’t have a loan, to settle some of your other debts.
Engaging in illegal activities
Under South African law (Chapter 6 of the Prevention of Organised Crime Act), the National Public Prosecutor can apply for any property used in the commission of a crime, or believed to have been purchased with the proceeds of crime, to be attached and forfeited to the State.
Standing surety for someone else’s debt, or for the debts of a business
“If the other person or the business defaults in such cases, the creditors will be entitled to come after you personally or attach your private assets to settle the debts, and there is a very real possibility of losing your home,” says Everitt. “You should therefore be very wary of ever acting as surety for anyone else, even your own children or parents.”
Apart from honouring your financial commitments it is also a good idea to ensure that you are always certain of the impacts of any new decisions you are making, to avoid situations where you are left without a home due to unforeseen implications or the actions of someone else.