Client Types

bond originators
bond originators

INDIVIDUAL

Natural Person over age of 18 years.

JOINT ACCOUNT

Any Natural Persons over the age of 18 years who wish to purchase a property in their joint names.

MARRIED COUPLES

  • Out of Community of Property Both partners have full contractual power. Bond can be in both names or either name provided. Each qualifies in their individual capacity.
  • In Community of Property Bond must be registered in both names.
  • Foreign Matrimonial Property Marriage partners are viewed according to law of country where they are married.
  • Tribal Law This is not recognised as a legal marriage.
  • Religious (Hindu or Muslim) Not recognised as a legal marriage unless magistrate or commissioner has conducted it.
  • Minor Must obtain consent from Supreme Court in terms of Section 80 of Administration of Estates Act 60 or 1965 before buying a property.

COMPANIES

  • A Company can buy property provided that Section 38 of the Companies Act will not be contravened. This prohibits company from financing the purchase of its own shares.
  • PTY LTD COMPANY: Has memorandum and articles of association and 1–50 shareholders.
  • LTD COMPANY: Same as Pty Ltd with minimum of 7 shareholders and 2 directors.
  • INFORMAL BODY: Recognised churches and associations may buy property – obtain latest set of financials and resolution from last meeting approving purchase of property.
  • CLOSE CORPORATION: 75% of members to agree on either purchase or sale, 1–10 natural persons. If client buys existing property registered in name of CC and keeps CC, client will be liable for any debt incurred by CC.

DEFINITION ON DIFFERENT ENTITIES

TRUST (STARTS WITH MT or IT)
A Trust is formed by an agreement in terms of a Trust Deed whereby the assets of one person is placed under the control of another person in order to administer the asset to the benefit of the trust beneficiaries.

It is essential for a Trust Deed to be obtained in the event of a Trust providing security and especially a suretyship. The Trust number has anything from 1 up to 8 digits – 4 digits for the year.

A Trust is not a legal entity. It functions through its Trustees and keeps on existing despite any changes in the Trustees. Unless the Trust Deed stipulates otherwise, the Trustees always have to act jointly.

To bind a Trust, it is essential that the Trust Deed is obtained and scrutinised to ascertain the powers of the Trustees. If a Trust applies for an advance or provides security or suretyship, resolutions prior or simultaneous to the signing of security documents by all the Trustees to this effect must be obtained.

Since a Trust is not a legal entity, all documents in favour of a Trust should be completed and signed by all the Trustees in their capacity as Trustees.

SOLE PROPRIETOR

When a person runs any type of business under a trade name of which he is the Sole Owner.

The contractual capacity of a Sole Proprietor vests in the owner who acts on behalf of the enterprise in his personal capacity.

When dealing with a Sole Proprietor, you will obtain the same documentation as when you are dealing with a natural person.

PARTNERSHIPS

A Partnership is formed when two or more persons (maximum 20) decide to run an enterprise and to share the profits in terms of an agreement which can be in writing, verbally or tacitly.

The Bank requires that the relevant documentation applicable to any transaction entered into with a Partnership MUST be signed by ALL the Partners.

ALL the Partners are jointly and severally liable for the commitments of the Partnership. If the Partnership is declared insolvent, the private estates of the Partners are also sequestrated.

When dealing with a Partnership, you will obtain the same documentation for each Partner as when you are dealing with a natural person.

CLOSE CORPORATIONS (ENDS WITH /23)

A Close Corporation is an association of persons formed in terms of the Close Corporations Act No. 69 of 1984. A Close Corporation is a legal entity with one or more (10 maximum) members. The CC number always starts with the year it was formed followed by 6 digits then followed by 23 (eg 1984/123456/23).

As a result of various complicated stipulations in the Close Corporations Act, the Bank requires ALL the members to sign security documents on behalf of the Close Corporation and that they guarantee the facilities in the personal capacity / and give unlimited cessions of loan accounts.

N B The Bank requires certified copies of the Founding Statement and Certificate of Incorporation.

COMPANIES (ENDS WITH /10 or /07)

A Company is an association of persons formed in terms of the Companies Act No. 61 of 1973. A Company functions through a board of Directors and is a separate legal entity. The registration number always starts with the year it was formed followed by 6 digits then followed by 10 or 07 (eg 1973/123456/10 or 07).

The Act provides for two types of Companies:

1. Public Company (Ltd)
• At least 7 persons with at least 2 directors.
• Shares and debentures can be listed and traded on Stock Exchange.

2. Private Company (Pty) Ltd
• One or more with maximum of 50 persons with at least 1 Director.
• Shares cannot be freely transferred.

Obtain the Company’s public documents – which are:

1. Certificate of Incorporation.
2. Certificate to Commence Business.
3. Memorandum of Association.
4. Articles of Association.

NB Section 38 restricts Companies. Imposes an absolute prohibition on any form of financial aid or furnishing of security by a Company in favour of anyone else for the buying of shares in the Company itself or in its holding Company.

INFORMAL BODY

An informal body is an informal association of persons who do not have profit as an objective, e.g. Churches, Clubs, Associations and Schools.

In order to bind an informal body as such, it is crucial to obtain the constitution or regulations of the body to determine whether any powers were granted. An informal body cannot act by itself or make decisions and a resolution in respect of advances asked for and the provision of security must be obtained under all circumstances.

CONTRACTUAL CAPACITY

MINOR
A minor is any unmarried natural person who has NOT reached the age of 18 years or who has NOT been declared a major by court.

A minor is emancipated when he is 18 years or older or through marriage and may apply to be declared a major in terms of the Age of Majority Act No. 57 of 1972.

Certain sections of the Children’s Act No. 38 of 2005 came into effect on 1 July 2007. The Act now determines that a child becomes a major on reaching the age of 18. The Age of Majority Act, 1972 has been repealed.

Persons who are 18 years and older can now sign legally binding contracts without the assistance of their legal guardian. For the bank this means that persons 18 years and older can now enter into loan agreements and sign collateral documentation without assistance.

Notwithstanding the above, affordibility and the normal credit criteria still applies.

MARRIAGES

1. TRIBAL CUSTOM
South African Law does not recognise these marriages.

2. COMMON LAW
These persons are to be regarded as married in Community of Property (COP).

3. RELIGIOUS CUSTOMS (PERSONS OF EASTERN DESCENT)
South African Law does not recognise these marriages. Both parties are therefore regarded as being unmarried.

4. MARRIED OUT OF SOUTH AFRICA
These persons are to be regarded as married in Community of Property. If married under laws of England or Zimbabwe, these marriages are out of community of property and certified copies of relative documents must be kept on file. Spouses married abroad must assist each other in all deeds and documents which are to be registered in the Deeds Office.

5. MARRIED IN COMMUNITY OF PROPERTY (COP)
When married in Community of Property, spouse to assist in signing all documentation. Joint estate, therefore all documents to be signed by BOTH persons.

6. MARRIED ANC (ANTE NUPTUAL CONTRACT)
No consent of spouse required.

7. DIVORCED
Have FULL contractual capacity.

8. PHYSICALLY AND MENTALLY INCOMPETENT PERSONS
Only the curator may act for the incompetent person as he has NO contractual capacity.