Your joint mortgage may form part of your partner’s debt review without your consent.
If you are married in community of property and your spouse is placed under debt review, so will you, because you share a joint estate which includes all debt.
However, what about situations where you are married out of community of property, are divorced or where you have taken a joint mortgage with a friend or relative? If the other party to the joint mortgage is placed under debt review, what rights do you have?
In theory a debt counsellor is supposed to inform the other bond-holder about the debt review application of their client. This is according to Ms Nthupang Magolego, Senior Legal Advisor at the National Credit Regulator who says, “This notification will give the consumer who has not applied for debt review an opportunity to consider various options that may be available. The consumer who has not applied for debt review will not be flagged at the credit bureaus.”
However, this does not appear to be happening in practice as a reader discovered when her ex-partner put himself under voluntary debt review. “He signed over his power of attorney to a debt counselling company and renegotiated our monthly home loan repayments without him or the debt counsellor telling me. I found out by accident as the home loan repayments come off my ex’s account each month by debit order.”
She asked for the home loan to be removed from the debt review, but neither her ex nor the debt counsellor was willing to do so. The bank also refused to remove the joint home loan from the debt review process and the incident turned into a blame game, with the bank blaming the debt counselling company for applying for debt review on a joint home loan without both parties’ consent and the debt counselling company blaming the bank for not informing them it was a joint home loan when the bank sent through the Certificate of Balance (CoB).
Who is responsible for what?
So, what actually should have happened? Who is responsible for what, and what are the rights of the reader in this regard?
According to Paul Slot, head of the Debt Counsellors Association of South Africa (DCASA), the issue of how to handle joint mortgages under debt review is not clearly defined in the National Credit Act, hence the confusion over the process. “Joint mortgages are not catered for in the National Credit Act and so the issue is very problematic. This topic has been under discussion for the last 10 years at the Credit Industry Forum set up by the NCR.”
According to Slot’s understanding of the law, the onus is on the bank, not the debt counsellor, to inform the client. “The debt counsellor does not need to obtain the consent of the non-debt-review partner as the debt counsellor has no legal relationship with the non-debt-review consumer. It is the client under debt review who is responsible for supplying the financial information and payment commitment from the non-debt-review party. On the other hand, the credit provider (bank) has a legal relationship with both consumers and they should therefore inform both parties of the debt review application, but they don’t always do this.”
Although the joint mortgage can form part of the debt review process without the consent of the partner, if the partner is not over indebted, he/she cannot be included in the debt review process and it should not affect the partner’s credit record.
How the process works
Slot explains how the process currently works:
- If a consumer applies for debt review and a joint mortgage is present, the bank will notify the debt counsellor on the Certificate of Balance (COB) that the mortgage is a joint mortgage.
- If the bond-holder who is not under debt review is not over-indebted, that person would not form part of the debt review, unless they are married in community of property.
- If the bond is paid in full by the non-debt-review party, then the bond can be excluded from the debt review process.
- In other situations, the debt counsellor should request the debt review applicant to obtain the non-debt-review consumer’s financial commitment to pay the bond (this may include details of income and expenditure) and that payment should be made directly the bank.
- No credit provider or debt counsellor has the statutory power to remove a bond from debt review unless the non-debt-review partner has been paying 100% of the bond.
Considering this legal minefield, if you are going to enter into a joint home loan, make sure you have a separate agreement as to what happens if one of you can no longer pay or are put under debt review.
This article first appeared in City Press.
can someone remove their name on a bond and then stand surety for the same house when the couple that will be on the bond is under debt review and also rent halve of the house out
The bank may not allow someone who is under debt review to take out a mortgage. Is this bond already in their names? In terms of renting out the house – that would have to be an agreement between yourself and the home owner
Good day,
I need some assistance or advise on something regarding my Home loan.
Myself & my husband have a flexi home loan with FNB linked to an access account that all the extra monies we pay on the bond goes into.
Due to the COVID-19 and other financial reason I went under debt review only me not my husband.
I advised the debt consultant that I don’t want my bond affected and so it is not part of my payment plan.
The bank has now deactivated the access account and we can’t draw the monies that is in the account.
I’m at a lost here and feel like jumping of a bridge.
Thank you
hi Maya, my girlfriend and I, wants to buy a house. however, i am under debt review and she is not. i have enough money left to pay the bond of at least R8000 excluding her contribution. will bank consider this or the fact that i am under debt review block everything?
if it blocks everything, do i have an option to cancel the administration – it is two months old? thanks
You cannot take on any debt so you cannot have a joint bond with her. I am surprised that you would have this money available – why don’t you use it to pay off your debts sooner and exit debt review? You can only exit debt review when your debts are settled
Hi,we divorced our home was settled so now I want to change owner ship and continue with payment home insurance. I joined debt review and soon withdraw so can I pay home insurance while I’flaf is still available?I on the system
Not quite sure I understand, but if the question is whether you can pay for insurance whilst under debt review – yes you can
In the event that the consumer is married out of community of property but shares a joint home loan, however the husband only wants to go under debt review and his paying the bond would the wife still be allowed to make debt if she does not want to be under debt review only the husband wants to be under debt review ?
The wife does not have to enter debt review as long as they are married OUT of community of property. It would only reflect on his credit score.
What happens to joint mortgage bond when my husband was divorced with his first wife and he marries me in community of property before he died. The house is under his name and the first wife.The rule after the divorce stated clear that the house will be divided equally so between them.
When you say joint mortgage – is there still money owing on the bond and is your husband’s former wife responsible for payment to it?
In terms of the property, as half the house was her’s before your marriage it did not form part of his estate in terms of community of property. So now you and his former wife each own half the house. That is a messy situation…
I just found out that my wife has applied for debt review on the account that I did not know exist. She open a credit card account without my knowledge and has since fallen behind with payments. Only found out when I was about to buy a second property. How do I go beyond this and how do I get it remived
If you are married in community of property both spouses go under debt review. It is a crazy situation where credit providers are not supposed to lend to people without spouse approval if married in COB but they do anyway. And then you end up responsible for the debt. The only way out is to clear the debts
My partner & i bought a home 16 years ago & he left me with his share of municipal debt & he discontinued paying his bond 10 years ago
In 2010 i got a lawyer to offer to purchase his share of property that he ignored. I have always maintained the property even though he shared the home with me for about 6 years, all he did was pay his 50% of the bond until 2010
Is he entitled to 50% of this joint property even though he defaulted financially and emotionally
I was summonsed by the high court & we have not heard from his newly appointed attorney since september 2018. This legal process started 2 years ago March 2020
Appreciate your advice please
I have maintained payments by myself & have put in a counterclaim of more than R1M with evidence to prove my expenditure. This is without interest added
Thank you
logically I would think that while he can claim 50% of the property you can make a counter-claim for the amount he owes you (including interest). Sadly if he is not co-operative the lawyers are the ones who make the money…
Good day
May I have more clarity on this regard please. The law jargon I find difficult to understand. My partner and I we have joint home loan. He wants to go under debt review but not me. How will this affect me with regards to our joint home loan. What is my options as I do not want to apply for debt review as my finances are pretty stable.
Thank you in advance
This was quite a contentious point and I wasn’t even clear as there doesn’t seem to be a single way of handling it. They cannot put you under debt review but they can include his portion of the loan under debt review. If you can tell me the name of the bank I will see if they will comment on how they would handle the joint home loan
Interesting topic I am educated now this information is important.
Thank you
This is a problem: the Matrimonial Act is applicable and a joint bond with one partner under debt review is not possible without the other partners consent or inclusion in the debt review. This will affect both parties and the credit provider in question has a case against the debt counsellor for breach of his/her registration conditions and the National Credit Act. In the National Credit Act there is a table published which refers to all other applicable legislation: Act 88 of 1984 Matrimonial Property Act section 15
Powers of spouses
(1) Subject to the provisions of subsections (2), (3) and (7), a spouse in a marriage in community of property may perform any juristic act with regard to the joint estate without the consent of the other spouse.
(2) Such a spouse shall not without the written consent of the other spouse –
(a) alienate, mortgage, burden with a servitude or confer any other real right in any immovable property forming part of the joint estate;
(b) enter into any contract for the alienation, mortgaging, burdening with a servitude or conferring of any other real right in immovable property forming part of the joint estate;
(c) alienate, cede or pledge any shares, stock, debentures, debenture bonds, insurance policies, mortgage bonds, fixed deposits or any similar assets, or any investment by or on behalf of the other spouse in a financial institution, forming part of the joint estate;
(d) alienate or pledge any jewellery, coins, stamps, paintings or any other assets forming part of the joint estate and held mainly as investments;
(e) withdraw money held in the name of the other spouse in any account in a banking institution, a building society Of the Post Office Savings Bank of the Republic of South Africa;
(f) enter, as a consumer, into a credit agreement to which the provisions of the National Credit Act, 2005 apply, as ‘consumer’ and ‘credit agreement’ are respectively defined in that Act, but this paragraph does not require the written consent of a spouse before incurring each successive charge under a credit facility, as defined in that Act;
If the parties are not married or married outside of community of property the inclusion of the joint bond under debt review is even more problematic. I would suggest that a expert be contacted in this regard.
The last opinion is that section 86(7)(c) makes provision for one or more credit agreements to be included in debt review NOT ALL OF THEM.
The comments in this article is very concerning.
Appreciate your comments – it seems to be a mine field! The rules appear not to be applied correctly and are misunderstood. In this specific case they were not married so the Matrimonial Act does not apply.