When a Close Corporation (CC) Member Dies or Changes - What Happens to the Bond?

When a Close Corporation (CC) Member Dies or Changes - What Happens to the Bond?

Many assume a bond falls away when ownership changes. Not true. Here’s why banks remain protected.

When a CC owns property bonded to a bank and the sole member passes away, the question often arises: does the bond fall away? The answer is simply no.

A registered mortgage bond attach to the property, not the owner. Even if the member dies or heirs inherit, the bond remains fully enforceable until the debt is paid. Heirs inherit the member’s interest in the CC, not the property itself, and all dealings must go through the executor of the estate.

If the CC has been deregistered, its property temporarily vests in the State (bona vacantia) and enforcement pauses. Once the CC is restored, both its assets and liabilities re-vest, and the bank’s rights revive automatically.

Two practical options remain:

• Sell the property to settle the debt, cancelling the bond only once the bank is paid in full.

• A beneficiary may assume the debt, but only with the bank’s consent.

In short, a change in ownership never cancels the bond, the bank’s security remains intact until the debt is fully settled.

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