Notarial bonds offer businesses and lenders a powerful legal tool for securing debt—especially in transactions where physical possession of the asset isn’t practical or desirable. In South Africa, these instruments serve as an alternative to pledges, giving creditors a form of security over a debtor’s movable property without needing to take control of it.

But despite their growing use in commercial finance, notarial bonds remain poorly understood outside legal and financial circles. Many business owners aren’t sure how they work, what they cover, or how they compare to other forms of security. Worse still, some only learn about the risks and requirements when it’s too late—usually in the middle of a default or liquidation.

What is a Notarial Bond in South Africa?

A notarial bond is a form of security that allows a creditor to register a legal right over a debtor’s movable property—without taking physical possession of it. It is executed before a notary public and registered in the Deeds Office, giving the bondholder a real right of security enforceable against third parties.

In simple terms, it works like a mortgage—but instead of being registered over immovable property like land or buildings, a notarial bond is registered over movables such as equipment, stock, or intellectual property. The bond gives the creditor a preferential claim if the debtor defaults or is liquidated, depending on the bond’s type and structure.

This legal mechanism is particularly valuable in commercial transactions where debtors offer business assets as security but continue using them to generate income. It protects the lender’s interests without disrupting the debtor’s operations—a key consideration for both parties in industries like manufacturing, transport, retail, and agriculture.

Importantly, the bond must be registered at the Deeds Office to be effective against third parties. If it is not registered, the creditor’s claim becomes unsecured, which dramatically reduces their protection in the event of insolvency.

What is the Difference Between a Pledge and a Notarial Bond?

Both a pledge and a notarial bond are methods of securing a debt, but they differ in how the security is held and enforced.

A pledge requires the debtor to physically deliver the movable asset to the creditor. This transfer of possession is what gives the creditor security over the asset. It’s a straightforward arrangement but often impractical—especially when the asset is essential to the debtor’s business operations. A logistics company can’t hand over its trucks as security, and a manufacturer can’t surrender its machinery mid-production.

A notarial bond, by contrast, allows the debtor to retain possession of the movable asset while still granting the creditor a real right of security over it. This is achieved by registering the bond at the Deeds Office, which publicises the creditor’s interest and makes it enforceable against third parties.

The result is a more flexible form of security. The debtor continues to use the asset in the normal course of business, while the creditor gains legal priority over it in the event of insolvency or breach. However, the legal protection offered by a notarial bond depends on the type of bond (general or special) and how it is structured—issues we’ll explore next.

What is the Difference Between General and Special Notarial Bonds?

Notarial bonds fall into two categories in South African law: general notarial bonds and special notarial bonds. While both serve to secure debt over movable property, the protection they offer and the conditions they require differ significantly.

Special Notarial Bond

A special notarial bond is registered over specifically identified movable property. This includes individually listed assets—like vehicles, machinery, or certain items of equipment—which are described in detail in the bond itself.

What makes a special notarial bond particularly effective is that, under the Security by Means of Movable Property Act, it gives the bondholder the same legal standing as a pledge, without requiring possession. In other words, the creditor acquires a real right of security that is enforceable even in insolvency, provided the property is clearly and accurately described in the bond and is still in the debtor’s possession.

If the debtor defaults, the creditor may apply for a court order to take possession and sell the asset to recover the debt—without needing to stand in line with other unsecured creditors.

General Notarial Bond

A general notarial bond, on the other hand, is registered over the debtor’s movable assets in general—without identifying specific items. It may include all present and future movables, but it does not give the creditor a real right of security unless and until they physically take possession of the goods after default.

This means that a general notarial bond, on its own, does not grant the same level of protection as a special bond. If the debtor is liquidated, the creditor will rank as an unsecured creditor unless they’ve taken possession of the secured items before the liquidation process begins.

General notarial bonds can still offer strategic value, especially when used alongside other credit risk mitigation tools, but they must be approached with clear understanding of their limitations.

Summary of Differences

• A special notarial bond provides a real right of security over specifically listed movables, without requiring possession.
• A general notarial bond covers a broader range of movables but offers no real security unless possession is taken after default.
• Special bonds offer greater enforcement power in insolvency; general bonds may serve more as a deterrent or signal of risk management.

Subject Matter of a Notarial Bond

The value of a notarial bond lies in what it secures—and in South African law, that subject matter is not limited to physical goods. Notarial bonds may be registered over a wide range of movable assets, whether corporeal (tangible) or incorporeal (intangible), provided they are capable of being clearly identified and valued.

Corporeal Property

Corporeal property refers to tangible, physical items. This includes machinery, vehicles, tools, stock-in-trade, furniture, and raw materials—items that can be physically handled and described in the bond documentation. In the case of a special notarial bond, these items must be listed with sufficient detail to ensure they are individually identifiable; vague or generic references will render the bond ineffective as security.

Incorporeal Property

Incorporeal property, by contrast, refers to non-physical assets—such as trademarks, copyrights, goodwill, or shares. These can also serve as subject matter for a notarial bond, but they require more technical consideration. Their value and enforceability as security depend on the nature of the right involved and how that right is exercised or transferred.

In all cases, the underlying principle is the same: the asset must be capable of being described in a manner that allows it to be recognised, enforced, and—if necessary—sold to settle the debt. This requirement becomes particularly important when assessing the strength of a bond in liquidation proceedings, where poorly drafted descriptions or loosely defined subject matter can render a bond worthless in practice.

Aucamp Inc – Notary Public & Assistance with Notarial Bonds

Notarial bonds may appear straightforward, but their power lies in the legal precision with which they are drafted, described, and registered. Without the guidance of a qualified notary public, the bond may fail to provide the security a creditor believes they hold—particularly when it comes to enforceability in court or insolvency proceedings.

At Aucamp Inc, our team provides comprehensive support in the structuring and registration of notarial bonds in South Africa. We work closely with creditors, businesses, and property owners to ensure that the bond correctly reflects the asset, meets statutory requirements, and is properly lodged with the Deeds Office.

Contact us to find out more about our notarial services.