If your business needs financing but does not own immovable property, or if a lender requires additional security beyond a mortgage bond, a notarial bond may be the solution. Notarial bonds allow businesses to use movable assets — vehicles, equipment, machinery, stock-in-trade, even intellectual property — as security for a loan, without surrendering possession of those assets.
Despite being one of the most important security instruments in South African commercial law, notarial bonds are widely misunderstood. Business owners often confuse them with mortgage bonds, underestimate the consequences of choosing the wrong type of bond, or miss critical registration deadlines that render the entire instrument worthless.
This guide explains notarial bonds in plain language, while maintaining the legal precision that business owners and their advisors need. Whether you are a borrower offering movable assets as security, a lender structuring a secured facility, or an accountant advising a client on financing options, this is the definitive resource on notarial bonds in South Africa.
What is a Notarial Bond?
A notarial bond is a legal document that pledges movable property as security for a debt. Think of it as the movable-property equivalent of a mortgage bond: where a mortgage bond secures a loan against land or buildings, a notarial bond secures a loan against things that can be moved — vehicles, machinery, equipment, shares, or stock.
The critical feature of a notarial bond is that the debtor retains possession and use of the pledged assets. In traditional pledge law, a creditor had to take physical possession of an asset to create security over it. That made commercial sense for a piece of jewellery, but it was impractical for a fleet of delivery trucks or a factory full of manufacturing equipment. Notarial bonds solve this problem by allowing security without surrender.
Key Characteristics of a Notarial Bond
- Security over movable property: Covers assets that can be physically moved — as distinct from immovable property (land and buildings) which is covered by mortgage bonds
- Must be attested by a notary public: Only a legal practitioner specifically admitted as a notary may attest the bond — an ordinary attorney or conveyancer cannot do so
- Registered at the Deeds Office: The bond must be registered at the relevant Deeds Office to be enforceable against third parties (other creditors, a liquidator)
- Debtor keeps possession: Unlike a traditional pledge, the debtor continues to use the assets in the ordinary course of business
- Governed by specific legislation: The Security by Means of Movable Property Act 57 of 1993 is the primary statute, supplemented by the Deeds Registries Act 47 of 1937
The legal foundation for notarial bonds is the Security by Means of Movable Property Act 57 of 1993 (the "Act"). This Act replaced the older Notarial Bonds (Natal) Act and created a uniform national framework for registering security over movable property. The Act works alongside the Deeds Registries Act 47 of 1937, which governs the registration process itself, and the Insolvency Act 24 of 1936, which determines how notarial bond holders rank when a debtor becomes insolvent.
In Plain Terms
A notarial bond is like a mortgage bond for things that move. Your business pledges its vehicles, equipment, or stock as security for a loan, but keeps using those assets every day. If you default on the loan, the lender can apply to court to have those assets sold to recover the debt. If your business is liquidated, the type of notarial bond determines whether the lender is paid before or after other creditors.
Types of Notarial Bonds: General vs Special
South African law recognises two types of notarial bonds. The distinction between them is one of the most important concepts in secured lending — it determines the creditor's ranking in insolvency, the level of protection the bond provides, and how the bond is drafted. Getting the wrong type can cost a lender millions of rands if the debtor becomes insolvent.
General Notarial Bond
A general notarial bond creates blanket security over all of the debtor's movable property — or all movable property of a particular class — without identifying specific individual assets. The bond does not list serial numbers, registration plates, or unique descriptions. It simply covers "all movable assets" or "all vehicles" or "all stock-in-trade" belonging to the debtor.
Advantages
- •Covers all current movable assets without itemising each one
- •Simpler and faster to draft — no asset schedules needed
- •Provides preference over concurrent (unsecured) creditors in insolvency
- •Useful when asset composition changes frequently (e.g. stock-in-trade)
Limitations
- •Provides only a personal right — not a real right of security
- •Creditor does not rank as a secured creditor in liquidation
- •Ranks below special notarial bond holders and mortgage bond holders
- •Weaker protection if debtor sells or disposes of assets before default
Insolvency ranking: A general notarial bond holder is a preferent creditor under section 102 of the Insolvency Act — paid after secured creditors but before concurrent (unsecured) creditors.
Special Notarial Bond
A special notarial bond is registered over specific, individually identified movable assets. Each asset must be described in enough detail to distinguish it from all other assets of the same type. This means serial numbers for machinery, registration numbers for vehicles, and unique identifying features for other assets.
Advantages
- •Provides a real right of security (like a mortgage bond)
- •Creditor ranks as a secured creditor in liquidation
- •Deemed possession when assets are properly described
- •Strongest available protection for movable-asset security
Requirements
- •Every asset must be uniquely and specifically described
- •Serial numbers, chassis numbers, or registration numbers required
- •More complex and time-consuming to draft
- •Bond must be amended if secured assets change
Commercial reality: Most lenders strongly prefer special notarial bonds because secured creditor status can mean the difference between full recovery and receiving nothing in a liquidation. The extra drafting effort is almost always justified by the superior protection.
| Feature | General Notarial Bond | Special Notarial Bond |
|---|---|---|
| Coverage | All movable assets (blanket) | Specific identified assets only |
| Type of right | Personal right | Real right |
| Insolvency ranking | Preferent creditor | Secured creditor |
| Asset description | General class or category | Individual serial/registration numbers |
| Best used for | Stock-in-trade, rotating inventory | Vehicles, equipment, machinery |
When You Need a Notarial Bond
Notarial bonds are not theoretical legal instruments — they are practical tools used every day by South African businesses to access finance. Here are the most common scenarios where a notarial bond is the right solution.
SME Financing
Small and medium businesses often lack immovable property to offer as mortgage security. A notarial bond allows them to pledge business equipment, vehicles, and stock to secure a loan from a bank, private lender, or development finance institution.
Example: A printing company pledges its commercial printers (special notarial bond) and general stock of paper and ink (general notarial bond) to secure a R2 million business loan.
Equipment Financing
When a business purchases expensive equipment — construction machinery, medical devices, manufacturing plant — the lender will frequently require a special notarial bond over the specific equipment being financed.
Example: A construction company bonds three excavators and two cranes, each identified by make, model, year, and serial number.
Fleet Vehicles
Logistics companies, delivery services, and any business operating a vehicle fleet can pledge individual vehicles under a special notarial bond, or the entire fleet under a general bond — or both, for layered security.
Example: A courier company with 40 delivery vans pledges each vehicle individually under a special notarial bond to secure fleet financing.
Stock-in-Trade
Retailers, wholesalers, and manufacturers with significant inventory can pledge their stock-in-trade. Because individual stock items constantly change, a general notarial bond over "all stock-in-trade" is the standard approach.
Example: A hardware wholesaler pledges all stock-in-trade under a general notarial bond to secure an overdraft facility.
Additional Security
Notarial bonds are often used as additional security alongside other instruments. A lender might hold a mortgage bond over business premises and also require a notarial bond over equipment and vehicles. This is common in asset-backed lending structures where the lender wants security over as many assets as possible.
The Registration Process
A notarial bond is only enforceable against third parties once it has been registered at the Deeds Office. The registration process is precise and time-sensitive. Missing a deadline or making a drafting error can render the entire bond worthless.
Instruction and Due Diligence
The notary receives instructions from the creditor (lender), gathers FICA documentation from the debtor, verifies the debtor's identity, confirms the debtor's legal capacity to bind the assets, and conducts a Deeds Office search to check for existing bonds over the same assets.
Drafting the Bond
The notary drafts the bond document. For a special notarial bond, each asset must be described with sufficient specificity — make, model, year, serial number, chassis number, or other unique identifying feature. For a general notarial bond, the class of assets is described. The bond states the amount secured, the parties, and the terms.
Execution and Attestation
The debtor signs the bond in the presence of the notary public. The notary attests the bond, confirming the debtor's identity, verifying that the debtor understands the implications, and certifying compliance with statutory requirements. The notary affixes their notarial seal.
Lodgement at the Deeds Office
The bond is lodged at the appropriate Deeds Office. Which Deeds Office depends on the type of bond:
- •General notarial bond: Deeds Office where the debtor resides or carries on business
- •Special notarial bond: Deeds Office covering the area where the assets are situated
Examination and Registration
The Deeds Office examines the bond for compliance with the Deeds Registries Act and the Security by Means of Movable Property Act. If there are defects, the bond is rejected and must be corrected. Once approved, the bond is registered and becomes enforceable against third parties.
The 3-Month Deadline — Section 3(1)
Section 3(1) of the Security by Means of Movable Property Act requires that a notarial bond be lodged for registration within 3 months of its date of execution. If this deadline is missed, the bond is void against third parties — it cannot be enforced against other creditors, a liquidator, or anyone who subsequently acquires the assets.
This is one of the most common and most costly mistakes in notarial practice. A bond executed on 1 March must be lodged at the Deeds Office by 31 May at the latest.
Costs and Fees
The cost of registering a notarial bond is based on a prescribed tariff linked to the value of the bond. The tariff is set out in the Deeds Registries Act and applies uniformly across all notaries in South Africa. A notary is not permitted to charge less than the prescribed tariff, and the tariff is a sliding scale — higher bond values attract lower percentage fees.
What You Can Expect to Pay
The total cost of a notarial bond includes several components:
- Notarial fees: Calculated on the prescribed sliding scale based on the bond amount
- Deeds Office registration fee: A fixed fee payable to the Deeds Office
- Disbursements: Deeds Office searches, FICA compliance, postage, and administration
- VAT: 15% VAT on all professional fees
Who Pays?
The parties may agree who bears the cost, but it is typically the debtor (borrower) who pays the notarial and registration fees. In some lending arrangements, the creditor (lender) pays the fees upfront and adds them to the loan amount. It is important to clarify this at the outset of the transaction.
Notarial Bonds vs Mortgage Bonds
This is one of the most common questions we receive. Many business owners — and even some financial professionals — confuse notarial bonds with mortgage bonds. While both are security instruments registered at the Deeds Office, they serve fundamentally different purposes and cover different types of property.
| Aspect | Notarial Bond | Mortgage Bond |
|---|---|---|
| Property type | Movable property (vehicles, equipment, stock, IP) | Immovable property (land, buildings) |
| Attested by | Notary public (specialist qualification) | Conveyancer (bond attorney) |
| Primary legislation | Security by Means of Movable Property Act 57 of 1993 | Deeds Registries Act 47 of 1937 |
| Registration deadline | Within 3 months of execution | No statutory deadline (linked to transfer) |
| Type of right | Real right (special) or personal right (general) | Always a real right |
| Typical use | Business financing, asset-backed lending | Home loans, commercial property purchases |
Key takeaway: A mortgage bond always provides a real right and secured creditor status. A notarial bond only provides those benefits if it is a special notarial bond. A general notarial bond provides weaker protection. This distinction is critical when negotiating security packages with lenders.
Enforcement
Having a registered notarial bond is only useful if it can be enforced when the debtor defaults. Understanding the enforcement process — and the differences between how general and special bonds are enforced — is essential for both creditors and debtors.
Court Order Required
A court order is always required to enforce a notarial bond. A creditor cannot simply arrive at the debtor's premises and seize assets. Self-help remedies are not available — the creditor must apply to court for an order authorising the seizure and sale of the bonded assets.
This requirement protects debtors from arbitrary action and ensures judicial oversight over the enforcement process.
General Bond Enforcement
- Creditor must apply to court for an attachment order
- Creditor must perfect security by taking actual possession
- In insolvency: ranked as preferent, not secured
Special Bond Enforcement
- Creditor applies to court for attachment and sale
- Deemed possession — no need to physically take possession first
- In insolvency: ranked as secured creditor — paid first
Key Legislation
Three Acts of Parliament form the legislative framework for notarial bonds in South Africa. Understanding their interaction is essential for anyone involved in secured lending over movable property.
Security by Means of Movable Property Act 57 of 1993
The primary statute governing notarial bonds. This Act created a uniform national system for registering security over movable property, replacing the fragmented provincial legislation that existed before. Key provisions include:
- •Section 1: Definitions of general and special notarial bonds
- •Section 1(1): Requirements for a special notarial bond (specific description of assets to create deemed possession)
- •Section 3(1): The 3-month registration deadline — bond must be lodged within 3 months of execution
- •Section 2: Requirements for validity and enforceability
Deeds Registries Act 47 of 1937
Governs the registration system for all deeds, including notarial bonds. This Act prescribes the formal requirements for lodging and registering a notarial bond at the Deeds Office, and sets the tariff for notarial and conveyancing fees. Key provisions for notarial bonds include the form and content requirements for bond documents, and the examination and registration procedures.
Insolvency Act 24 of 1936
Determines how creditors are ranked and paid when a debtor is declared insolvent or a company is liquidated. The type of notarial bond directly determines the creditor's position in the insolvency waterfall:
- •Special notarial bond holders: Secured creditors — paid first from the proceeds of the specific bonded assets
- •General notarial bond holders: Preferent creditors under section 102 — paid after secured creditors but before concurrent creditors
- •Concurrent creditors: Unsecured creditors — paid last, and often receive little or nothing
Frequently Asked Questions
These are the questions we are asked most frequently by business owners, accountants, and lenders about notarial bonds in South Africa.
1What is a notarial bond?
A notarial bond is a legal instrument that allows a creditor to register security over a debtor's movable property — such as vehicles, equipment, machinery, stock, or intellectual property — without taking physical possession of the assets. It is the movable-property equivalent of a mortgage bond and is governed by the Security by Means of Movable Property Act 57 of 1993.
2What is the difference between a general and special notarial bond?
A general notarial bond covers all of a debtor's movable assets (or all assets of a particular class) without identifying specific items. It provides a personal right and preferent creditor status. A special notarial bond covers specifically identified assets (described by serial number or unique characteristics), provides a real right, and gives the creditor secured creditor status in insolvency. The special bond is significantly stronger.
3How long does notarial bond registration take?
The total process from instruction to registration typically takes 2 to 4 weeks, depending on the complexity of the bond, the availability of asset information, and the Deeds Office processing time. The critical deadline to remember is that the bond must be lodged for registration within 3 months of execution under section 3(1) of the Act.
4What does a notarial bond cost?
Costs depend on the bond value and complexity. For a standard commercial bond, expect to pay between approximately R8,000 and R25,000 or more, inclusive of notarial fees (prescribed sliding scale), Deeds Office registration fees, disbursements, and VAT. The notarial fee itself is regulated and cannot be discounted below the prescribed tariff.
5Can you cancel a notarial bond?
Yes. Once the underlying debt has been repaid in full, the creditor provides a consent to cancellation. The notary prepares a cancellation document which is registered at the Deeds Office. Cancellation is important to clear the debtor's record and free the assets. It is the debtor's right to demand cancellation once the debt is settled.
6What happens to a notarial bond in insolvency?
This depends entirely on whether the bond is general or special. A special notarial bond holder is a secured creditor — paid first from the proceeds of the specific bonded assets. A general notarial bond holder is a preferent creditor — paid after secured creditors but before unsecured (concurrent) creditors. This distinction often means the difference between full recovery and receiving nothing.
7What is the 3-month deadline for registration?
Section 3(1) of the Security by Means of Movable Property Act requires the bond to be lodged for registration at the Deeds Office within 3 months of its execution date. If this deadline is missed, the bond is void against third parties — meaning it cannot be enforced against other creditors, a liquidator, or anyone who acquires the assets. This is one of the most common and costly mistakes in notarial practice.
8What movable assets can be covered by a notarial bond?
Almost any movable property can be covered, including motor vehicles, commercial vehicles, machinery, equipment, office furniture, stock-in-trade, livestock, intellectual property (patents, trademarks, copyrights), shares, book debts, and digital assets. For a special bond, each asset must be individually and specifically described.
9Who can attest a notarial bond?
Only a notary public — a legal practitioner who has been specifically admitted as a notary by the High Court of South Africa. An ordinary attorney or conveyancer who has not been admitted as a notary cannot attest a notarial bond. Notaries undergo additional training and examination beyond the attorney's qualification.
10Is a notarial bond the same as a mortgage bond?
No. A mortgage bond is registered over immovable property (land and buildings) and always provides a real right and secured creditor status. A notarial bond is registered over movable property (vehicles, equipment, stock). Only a special notarial bond provides equivalent protection to a mortgage bond. A general notarial bond provides weaker protection.
Choosing the Right Notarial Bond
The choice between a general and special notarial bond is not merely a legal technicality — it is a commercial decision that directly affects a creditor's ability to recover money if things go wrong. A special notarial bond costs slightly more to prepare and takes longer to draft, but it provides secured creditor status that can be worth millions in a liquidation.
For borrowers, understanding these instruments helps in negotiating financing terms and structuring security packages that are proportionate to the risk. For lenders, correct structuring and timely registration are the foundations of enforceable security.
In all cases, the involvement of an experienced notary public is not optional — it is a legal requirement. A notary who understands both the legal framework and the commercial context can ensure that the bond serves its intended purpose and withstands scrutiny if it ever needs to be enforced.
Register a Notarial Bond — Contact MJ Kotze Inc
Whether you need a general or special notarial bond, our team has the notarial expertise and commercial understanding to structure your security correctly, register it on time, and ensure it is enforceable when you need it.
About the Author
Martin Kotze
B.Com (Law), LLB — Attorney, Conveyancer and Notary Public
Martin Kotze is the founder of MJ Kotze Inc, a specialist law firm based in Pretoria, Gauteng. With over 10 years of experience in notarial practice, Martin has registered hundreds of notarial bonds for clients ranging from SMEs to listed companies. He is admitted as an Attorney, Conveyancer, and Notary Public of the High Court of South Africa.
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