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Usury Act, 1968 (Act No. 73 of 1968)

2A. Limitation of finance charges in respect of money lending transactions secured by certain mortgage bonds

 

 

Referenced by:

 

1) If a loan of a sum of money in terms of a money lending transaction is to be secured by a mortgage bond over immovable property and such bond is in terms of an agreement between the moneylender and borrower concerned, to be registered in a deeds registry before such sum of money is to be paid by such moneylender to or on behalf of such borrower, the moneylender shall be entitled to stipulate for, demand or receive finance charges in connection with such money lending transaction--
a) from the date on which such moneylender approved such loan until the date immediately preceding the date on which such sum of money is paid to or on behalf of the borrower, at an annual finance charge rate not exceeding the difference between the annual finance charge rate stipulated in the instrument of debt relating to such money lending transaction and the treasury bills rate applicable on the date on which such loan is approved: Provided that where the moneylender is required to furnish any guarantees on behalf of the borrower and for such purpose to deposit any money with the institution issuing the guarantee, he may recover the difference between the annual finance charge rate stipulated in the instrument of debt and the rate recoverable by him from such institution;
b) from the date on which such sum of money or any portion thereof is paid to or on behalf of the borrower and in respect of such sum or portion, as the case may be, at the annual finance charge rate disclosed in the instrument of debt relating to such money lending transaction.

 

2) If in any proceedings, whether by way of provisional sentence, summary judgment or otherwise, finance charges referred to in subsection (1) claimed in respect of the period from the date o which the loan concerned was approved until the on which such loan was secured by a mortgage over immovable property, and the borrower alleges that the registration of such bond or the payment of the loan after such registration was effected, was delayed by the moneylender concerned or any person acting on his behalf, judgment in respect of such finance charges shall not be granted in such proceedings unless such moneylender satisfies the court that the said allegations are without any substance.

 

3) An allegation referred to in subsection (2) shall not be made in any proceedings referred to in that subsection unless the borrower concerned objected in writing with the moneylender concerned within 12 months from the date on which the loan concerned was paid to him or on his behalf, to the delay by such moneylender of the registration of the mortgage bond concerned or of the payment of such loan after such registration.