Transfer of home loan on divorce


In praise of marriage in community of property

It’s common, in the event of divorce, for one spouse to keep the family home. Sometimes the asset may be sold. The spouses share the proceeds and go on to buy new properties that suit their new single lifestyle. But where there are children involved, one parent will often stay in the home. The divorce settlement can be structured in different ways: one spouse may buy out the other’s share, or the house may be awarded to one spouse as part of the settlement. If the property is mortgaged, most couples have a bond in joint names. What then happens, from a legal perspective, to the bond in the event of divorce? It’s a technicality that is often overlooked. Many people assume the divorce agreement covers all aspects of the financial separation of households. It does not. How is the transfer of home loan on divorce effected?

Personal finance expert Wendy Knowler discussed this on The Money Show on Cape Talk on 22 December and we listened in.

Whose name is on the bond?

Firstly, whose name is on the bond? If only one spouse’s name is on the bond, they are the legal home owner. If they are staying in the home, the spouse’s share of entitlement will be dealt with via the divorce agreement. If they are transferring ownership to the other spouse, for example if the husband’s name is on the bond but the wife is remaining in the home, then the deed will need to be transferred to the new name, with the associated fees. But if both names are on the bond, which is the most usual scenario for a married couple, then the process will depend entirely on the matrimonial regime.

Substitution of debtor

According to S57 of the Deeds Registries Act 47 of 1937, a substitution of debtor (SOD) is used when an existing owner takes over the obligation of a mortgage bond from a co-owner. S57 states, “the registrar may…register the transfer and substitute the transferee for the transferor as debtor in respect of the bond”. The cost to register the transfer is high. On a R1m bond, the transfer fees are nearly R30,000.

Matrimonial regime

However, this only applies to owners with no relationship to each other or couples married out of community of property. Couples married in community of property pay no transfer fees. They are only required to pay a conveyancing tariff fee of R2680 for a bond endorsement on the SOD. It is an administrative and (relatively) inexpensive solution. Couples married out of community of property must pay full transfer fees.

Pros and cons of matrimonial regimes

This might sound like a very strong argument for marrying in community of property. Historically, this was the standard marital regime. It remains the default today, in that marriage out of community of property requires the couple to draw up an antenuptial contract (ANC) setting out the terms and conditions of the marriage. More accurately, the ANC determines who gets what if the marriage is dissolved, either by death or divorce. Discussing the possibility of divorce when planning a wedding is distasteful to some people, and is often avoided unless there are particular assets one party wants to protect.

But a marriage out of community of property allows a couple to keep their finances separate. The debts and assets they have on entering the marriage remain exclusively theirs before, during and after the marriage. If a marriage out of community of property ends in divorce, the dissolution is financially much simpler and quicker. The estate of a marriage in community of property is equally divided on divorce, a process that can be messy and take a long time to settle, particularly if there is a lot of animosity between the spouses.

No right or wrong

There is no right or wrong and no ideal scenario. The choice of matrimonial regime is something each couple approaching marriage must consider in light of their individual circumstances. There are likely to be more important influences on this decision than the cost of transferring a bond on divorce. But it is a factor to bear in mind. The responsibility for this cost could be written into the ANC.

For divorcing couples married in community of property, there may be many complications to address. But at least the SOD on the home loan is straightforward and affordable.

Cape Town family lawyer can help

If you want more information on the different matrimonial property regimes or advice on an antenuptial contract, or if you are considering divorce and want to have a confidential chat about your options, we can help. Simon Dippenaar and Associates Inc. is a firm of family attorneys in Cape Town, Johannesburg and Durban with extensive experience of helping couples resolve differences respectfully, both at the beginning and end of their marriage. Call Simon on 086 099 5146 or email

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The information on this website is provided to assist the reader with a general understanding of the law. While we believe the information to be factually accurate, and have taken care in our preparation of these pages, these articles cannot and do not take individual circumstances into account and are not a substitute for personal legal advice. If you have a legal matter that concerns you, please consult a qualified attorney. Simon Dippenaar & Associates takes no responsibility for any action you may take as a result of reading the information contained herein (or the consequences thereof), in the absence of professional legal advice.

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