Notarial Bonds: The Registered Security Behind a Business Loan

When a bank lends money to a business, it wants more than a promise. For property, it registers a mortgage bond over the land. But many businesses run on movables: vehicles, machinery, stock, office equipment. The security that covers those assets is a notarial bond, and it is only a notary who can draw it up.

What a notarial bond is

A notarial bond is a bond attested by a notary public and registered in the Deeds Office, giving the lender security over movable property without the lender taking the goods into its possession. The borrower keeps using the assets, and the lender's right to attach them is registered and public. Anyone searching the property against the borrower's name or business can see the bond.

Consideration bond versus security bond

Two types are in everyday use:

• A security notarial bond covers a defined list of specific assets, item by item, with serial numbers where they exist.
• A general notarial bond covers all the borrower's movable property, present and future, within the limits the law allows.

A general bond gives a lender broader cover, but it also touches assets bought years after the bond is signed, so borrowers need to understand exactly what they are binding before they sign.

Why the notary is not optional

Only a notary public may attest a notarial bond, and the notary's certificate forms part of the registration. The bond is then registered in the Deeds Office, which is what gives the lender its preference over later creditors. A private agreement without registration is not a notarial bond and carries none of the protection. This is why the notarial field exists as a separate practice: the document, the attestation and the registration all have to speak to each other exactly.

What borrowers should watch

How We Can Help

• Confirm the list of assets before signing. An asset you thought was excluded can end up bonded.
• Understand the future-effect of a general bond on new purchases.
• Ask what happens on default: the bondholder's rights, and your right to sell the assets and settle the debt.
• Keep the bond in mind when you sell or dispose of bonded assets; the security follows the asset, not the borrower's goodwill.

OM Baloyi Inc offers notarial services through its notary, including notarial bonds, ante nuptial contracts, long leases, servitudes and the authentication of documents. If you are lending against movables, or borrowing against assets your business needs to keep working, speak to us about the bond that fits the deal.

OM Baloyi Inc | Attorneys, Conveyancers, Notaries, Properties, Tax, Mining 51 Bouvet Avenue, Bellairspark Ext 5, Northriding, 2162 T: 087 265 1059 | E: info@ombaloyi.co.za | www.ombaloyi.co.za