Explain how expropriation will affect bonds
Both the government and the country’s financial institutions must make it clear to South Africans what will happen to mortgage bonds on properties expropriated under the Expropriation Bill, according to the Institute of Race Relations (IRR).
In a statement on the Politicsweb site, the IRR’s Gabriel Crouse notes bonds to purchase property are a major financial obligation for countless SA households.
Says Crouse: ‘In instances where bonded properties are expropriated, what responsibilities will be imposed on the dispossessed bondholders? The Bill suggests that bonds will be terminated, but does this imply that outstanding debts will be cancelled? Or will bondholders be expected to continue servicing their bonds until they are paid off, even if the asset has been taken?’
He adds: ‘What position do banks take? Will they require bond payments to continue even if a client’s property is seized? And are they prepared to confront mass defaults, where clients who have been expropriated are unable or unwilling to continue paying for the property which they have lost?’
He called both the government and financial institutions to spell out their positions on this issue.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
