Notarial Bonds (Special and General)

08/09/2022 - By Tiffany Mare

In terms of Section 102 of the Deeds Registries Act, a notarial bond is a bond which hypothecates either all movable assets (general notarial bond) or specific movable assets (special notarial bond).

2.2.1 Requirements
Requirements for notarial bonds include the principal debt, of which repayment thereof is secured by the movable property of the debtor. The property must be movable. Movable property includes corporeal or incorporeal. The notary attesting the notarial bond must not have any interest therein.

2.2.2 Legal operation
Unfortunately, in the case of general notarial bonds, there is not much force and effect against third parties. The creditor does not obtain a real right of security in the property. Therefore, nothing is stopping the owner from alienating the movable assets. The creditor merely obtains a preference over concurrent creditors in the case of insolvency

2.2.3 Realising security on default
The creditor may claim for damages if he has suffered a loss as a result from the debtor alienating the assets which were bonded. The creditor can obtain a real right of security by perfecting the general notarial bond. Perfection is done by obtaining possession of the asset. This can be done by having a pledge clause in the general notarial bond, attaching the property through application to the courts.
The Creditor, may, if he doubts the debtor is keeping to his contractual obligations and thinks he might just alienate the assets, may apply to the courts for an interdict to prevent the debtor from doing so. He may also apply for an interdict against the 3rd party who is aware of the notarial bond whilst acquiring the asset from the debtor

2.2.4 Realising the security once the debtor is insolvent
If the general notarial bond is not perfected upon insolvency, the creditor will not have a limited real right against the insolvent estate If the bond is however perfected before the insolvency, he/she will then have a secured claim.