Selling your home at a loss
If you are forced to sell your property at a loss, here’s what you need to know. Maryna Botha, Attorney, Notary and Conveyancer at STBB, one of South Africa’s largest property law firms, provides legal guidance and tips if you face the sad reality that your home may sell for less than expected or needed.
Why home values can drop
Although most buyers expect property values to rise over time, this is not guaranteed. Prices may stagnate or decline due to economic conditions, neighbourhood trends, or rezoning developments. For example, if homes in your residential area are increasingly rezoned for business, the future value of your property could be negatively affected.
Recourse when value drops beyond your control
In most cases, there is no recourse for a seller. After transfer in the Deeds Office, the risk in the property passes to the buyer. The principle of caveat emptor (“buyer beware”) places responsibility on buyers to investigate the property and factors that may affect its future value before signing.
Sectional titles note: Under the Sectional Titles Act (1986), Section 25(14) requires disclosure if a developer has reserved a real right of extension. Non-disclosure may allow a buyer to cancel the agreement without penalty, as future extensions can reduce value (for example, blocking a current view or removing open space).
If you cannot settle your bond
A mortgage bond is registered over the property as security for the home loan. The Deeds Registries Act prevents transfer without bondholder consent. If sale proceeds will not cover your debt, you must involve your lender early.
- Sourcing reputable local estate agents
- Valuation and marketing support
- Price counselling and guidance on acceptable offers
- In some cases, negotiating discounts or interest-free repayment of shortfalls
Submitting offers below the outstanding bond
You can present offers to your lender even if they are below the outstanding balance. However, lenders are entitled to recover the full debt and are not obliged to accept a lesser amount. If an auction is likely to achieve a higher price, the bank may choose that route. Early, transparent engagement is best practice.
Outstanding utilities and levies
There is no exemption from paying debts; municipal charges and levies must be settled. In execution sales, purchasers often assume these debts, which reduces the net sale proceeds used to settle the bond.
Key laws that protect homeowners
The National Credit Act (2005) requires affordability checks and counselling before legal action. Rule 46A of the Uniform Rules of Court adds judicial oversight in foreclosure cases. Creditors must disclose payment history, property value, and personal circumstances. Courts may delay sales or require alternative options like restructuring or voluntary sale.
What bondholders can do to prevent losses
- Conduct affordability checks before granting loans
- Contact borrowers immediately after missed payments
- Educate homeowners on assistance options early
Legal disclaimer: This article provides general information, not legal advice. Always consult your bank, attorney, or financial advisor about your specific circumstances.
