If you are trying to get a home loan to buy a property, or if you already have one, you should find out the answer to the question ‘what is a sale in execution?’ As an individual who has debt on their name, it is important to understand the processes and consequences that take place when a debtor does not make their agreed payments.
This way, you will be prepared for any eventuality. If you are handling your home loan and other repayments just fine, you will probably not be very interested in finding out about non-payment consequences.
However, remember that life and finances in particular are unpredictable and many successful people have found themselves overwhelmed by debt and in trouble with their creditors. Make sure that you are prepared to handle any situation you may find yourself in by finding out about the processes that take place.
A sale in execution
A sale in execution is when an individual has not been able to make their monthly home loan repayments and their property is sold on to make the money that they owe back.
It works in the following way: when an individual takes on a home loan they sign an agreement which binds them to pay a certain amount every month as a loan repayment with interest.
Should a situation occur where they cannot afford their loan repayments, like the loss of a job or an unexpected, unavoidable expense like a medical bill, they will be in breach of their agreement to pay back their home loan.
When this happens, they will usually receive several warnings and if they still do not or cannot make their repayments, the financial service provider who financed the home loan will get a court order to attach and sell the property in order to make their lost money back.
A sheriff of the court will hold a public auction in order to sell the property. The properties and the auctions are usually advertised in two local papers in the area where the property is based as well as in the Government Gazette.
Local estate agents should also know about these properties. The sheriff will receive commission based on the purchase price of the property, not usually exceeding R7 000.
When you buy a property at a sale in execution you will have to pay a 10 % deposit on the purchase price of the property immediately on buying it. You will also have to pay the commission price on the day of purchase as well as give the seller guarantees on the balance of the purchase price and interest within one month. The buyer will also be responsible for any outstanding levies, water and electricity bills or anything similar.
Where can you find properties on sale of execution?
There are many properties that are available throughout the country on sale of execution. The best way to find a property near you is to contact your financial service provider and have a look at what properties they have on offer.
Standard Bank in particular offers a lot of advice and information on sale of execution as well as links to properties available on sale of execution throughout the country. Have a look at the properties on offer near you by visiting www.standardbank.co.za or going to the website of you financial service provider.
How to avoid your property being sold via sale in execution
In order to avoid getting into trouble with debt, make sure that you look at your credit record regularly and report any errors. Always make sure that you read the fine print before signing any loan agreement and make sure that you can afford your loan repayments with interest.
At the first sign of trouble, visit a debt counsellor and follow their advice to the letter. Don’t use credit unless you absolutely have to and always be responsible.