What is a guarantee and how long should it take to issue?

A guarantee is a formal document issued by a registered financial institution that guarantees payment of a specified amount upon registration of transfer.

Your usual transfer normally requires the following guarantees:

• A guarantee to settle the amount owed by the seller to his / her bank;
• A guarantee to settle the seller’s bond cancellation fees owed to the bond cancellation attorney;
• A guarantee to settle the balance of the purchase price.

Guarantees are usually issued by the bank from which the purchaser obtained a mortgage loan to enable him/her to purchase the property; or by a bank holding cash funds on behalf of the purchaser.

It is advisable to ensure that there is ample time for the guarantees to be issued when drafting an Offer to Purchase. The recommended time is usually 30 days after the granting of a Bond or 30 days from the date of signature of a cash deal.

By Damian Sequeira from Kruger Attorneys & Conveyancers Inc