Notary Public and Notarial Services

 

 

No, typically the debtor retains possession and use of the movable assets even after a General Notarial Bond is registered.  This is a significant advantage, allowing businesses to continue operating with their equipment and stock. However, in the event of default and enforcement, the creditor may need to obtain possession to perfect their security.

 Enforcement typically involves these steps:

  • Obtain a Court Order: The creditor will need to apply to court for an order authorizing the attachment and taking of possession of the bonded movable assets.
  • Attachment: Upon obtaining a court order, the Sheriff will attach the movable assets covered by the GNB.
  • Sale and Recovery: The attached assets can then be sold, and the proceeds used to settle the outstanding debt owed to the creditor.

GNBs offer several benefits to creditors:

  • Broad Security: Covers a wide range of assets with one registration, simplifying the security process.
  • Debtor Retains Use of Assets: Allows the debtor to continue operating their business and using the assets, unlike some forms of security that require handing over possession.
  • Preferential Claim: In case of debtor insolvency, a registered GNB grants the creditor a preferential claim over the bonded movable assets, giving them priority over unsecured creditors.
  • Public Notice: Registration at the Deeds Office provides public notice of the security interest, strengthening the creditor's position.
     

A GNB can cover a broad spectrum of movable assets owned by the debtor. This typically includes, but is not limited to:

  • Machinery and Equipment
  • Vehicles and Fleet
  • Inventory and Stock
  • Furniture and Fittings
  • Book Debts (in some cases, though often requires cession as well)
  • Essentially, any movable property the debtor owns that can be used as security for the debt.

The main distinction is:

  • General Notarial Bond: Covers all movable assets of the debtor as a blanket security, without listing specific items.
  • Special Notarial Bond: Secures debt against specifically listed and identified movable assets.
  • General Bonds are broader and simpler to establish, while Special Bonds offer more targeted security over particular valuable assets. The best type depends on the specific circumstances and the nature of the assets being secured.
     
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General Notarial Bonds

A General Notarial Bond provides a powerful security mechanism for lenders, securing movable property without requiring its physical transfer. As Notaries, Aucamp Attorneys play a crucial role in the meticulous drafting and registration of these bonds, ensuring robust legal protection for your financial interests and facilitating secure lending transactions.

What is a General Notarial Bond? 

A General Notarial Bond in South African law is a broad security instrument that creates a charge over all of a debtor's movable assets.  Unlike bonds that list specific items, a General Notarial Bond provides a "blanket" security over all movable property owned by the debtor at the time of registration.  However, it's important to understand that under common law, this bond initially grants the creditor only a personal right of security. To fully secure their claim, particularly in insolvency, the creditor must take possession of the bonded assets.  Without possession, the creditor's security remains imperfect.

Key Features of General Notarial Bonds

1. Security Over All Movable Assets A General Notarial Bond provides a broad security interest over all the debtor’s movable assets at the time of registration, including machinery, stock, vehicles, and equipment. Unlike Special Notarial Bonds, GNBs do not require a specific listing of assets, making them a flexible and comprehensive security tool.

2. No Physical Possession Required The debtor retains possession and use of the secured assets. This makes GNBs particularly advantageous for businesses that rely on their movable assets for daily operations.

3. Initial Personal Right of Security Upon registration, the creditor obtains a personal right against the debtor. However, this does not immediately create a real right over the assets, meaning the creditor’s security is initially limited in enforcement until further legal steps are taken.

4. Perfection of Security Through Possession To obtain a real right of security—particularly in cases of insolvency—the creditor must take possession of the secured assets. This process, known as “perfecting the bond,” strengthens the creditor’s legal claim over other creditors.

5. Preferential Claim in Insolvency If the debtor defaults or becomes insolvent, the creditor with a perfected bond has a preferential claim over the movable property, ranking above unsecured creditors.

6. Mandatory Registration for Legal Effectiveness For a General Notarial Bond to be legally enforceable, it must be registered at the Deeds Office. Registration provides public notice of the bond and establishes the creditor’s legal standing.

7. Notarial Preparation and Registration Process A Notary Public must prepare and attest to the bond before it is lodged for registration at the Deeds Office. Proper registration must take place in the Deeds Office where the debtor resides, conducts business, or where the assets are located. Failure to register correctly may result in an invalid bond.

8. Time-Sensitive Registration Requirements The bond must be lodged for registration within three months of signing to ensure its validity.

9. Enforceability Against Third Parties Once the security is perfected—either through possession or statutory provisions in insolvency cases—the creditor’s claim becomes enforceable against third parties, offering a higher level of protection than unsecured claims.

10. Attachment and Court Enforcement In the event of non-payment, the creditor can seek a court order to take possession of the movable property. This step may include attachment of the bonded assets, further strengthening the creditor’s security rights.

Key Steps in Registration

  • Preparation by a Notary Public The General Notarial Bond must be expertly prepared by a Notary Public. The Notary ensures the bond complies fully with all legal requirements and accurately reflects the security agreement.
  • Registration at the Deeds Office The Notarial Bond must be registered at the correct Deeds Office. This is crucial for validity. Registration must occur in the Deeds Office jurisdiction where the debtor resides, where their business is primarily carried out, or where the bonded property is located. Depending on the debtor's nature and operational scope, registration in multiple Deeds Offices may be necessary to achieve comprehensive security.
  • Lodgement Deadline Strict timelines apply. The Notarial Bond must be lodged for registration at the Deeds Office within three months of the bond's signature date, failure to meet this deadline will result in rejection of the bond by the Deeds Office, necessitating re-signing and re-submission, potentially delaying or jeopardizing your security.
     

Why is Correct Registration So Important?

  • Validity and Enforceability Incorrect registration, particularly in the wrong Deeds Office jurisdiction, can render the bond invalid and unenforceable, nullifying your intended security.
  • Real Right of Security Proper registration transforms the initial personal right into a legally recognized real right of security. This registered real right is enforceable against third parties, providing robust protection for the creditor, especially in scenarios like debtor insolvency.
  • Avoid Rejection and Delays Adhering to the three-month lodgement deadline is essential to avoid rejection by the Deeds Office and prevent costly and time-consuming delays in securing your interests.
  • Insolvency Implications The timing of bond registration relative to a debtor's potential insolvency can significantly impact the nature and effectiveness of your security.

Expert Registration of General Notarial Bonds with Aucamp Attorneys

The registration of a General Notarial Bond is a complex legal process demanding precision and adherence to regulations.  Aucamp Attorneys' experienced notarial team expertly handles all aspects of General Notarial Bond registration, ensuring your security is correctly established, legally sound, and effectively protects your financial interests.  Contact us today to ensure your Notarial Bond registration is handled with the expertise and diligence it requires.