Buying a repossessed house with FLISP (First Home Finance)

Can you use FLISP on a repossessed or auction house?

Yes, in principle. First Home Finance works with a home loan; the timing is the hard part.

First Home Finance is the government housing subsidy that used to be called FLISP (the Finance Linked Individual Subsidy Programme). It helps first-time buyers whose gross household income is between R3,501 and R22,000 a month, and it is paid at transfer, alongside a bond or other finance, to bring the amount you borrow down.

Many people looking at low-cost repossessed houses, the ones often called bond houses, fall inside that income band. So the question comes up often: can the subsidy be used on a house sold at a sheriff auction?

Nothing in the scheme is limited to properties sold by an estate agent. It covers buying an existing home, which is what a sheriff sale is. The difficulty is the order things happen in: a sheriff sale wants your finance settled within weeks of the auction, and a subsidy application wants paperwork you only receive once you have won the bid.

So it can work, but only if you start the bond and the subsidy before the auction, not after it. The sections below set out what the application asks for, where each piece comes from at a sheriff sale, and the deadline you are working against.

What the FLISP application asks for

The three property documents that trip up auction buyers.

Alongside your ID, proof of income and the other personal documents, a First Home Finance application asks for three things about the property: a signed deed of sale or offer to purchase, a bond approval or quotation, and a statement of transfer costs from the transferring attorney.

Lenders and the subsidy office also want to identify the property exactly, which means its erf number, or on a sectional title its section number and the name of the scheme.

At an ordinary private sale an estate agent hands you all of this. At a sheriff sale nobody does, which is why buyers get stuck. Each piece does exist, and the next two sections say where.

How to find the erf number of an auction property

It is in the Gazette notice, and RepoLens shows it free.

Every sale in execution is advertised in the Government Gazette, and the notice describes the property in legal terms: the erf number, the township, the registration division and usually the title deed it is held under. That description is what identifies the property for transfer.

RepoLens reads the erf number straight off the notice and shows it free on each listing, under Erf number. On a sectional title the notice gives a section number in a named scheme instead, and that appears under Legal reference. Where a notice did not state it, the field is simply missing.

If you need the title deed number as well, it is in the same notice text, and the conveyancer handling the transfer will confirm it against the Deeds Office record.

Who is the conveyancer at a sheriff sale?

You do not choose one. The conditions of sale name who transfers it.

At a private sale the seller appoints the conveyancer. At a sheriff sale the transfer is normally handled by the attorneys acting for the bank that brought the case, or by conveyancers they appoint, and the conditions of sale say so.

The conditions of sale lie for inspection at the sheriff's office before the auction, so you can read them, and see who will transfer the property, before you bid. The sheriff's office for each sale is on its RepoLens listing.

When you win the bid you sign the conditions of sale with the sheriff, and that signed document is your deed of sale. From then on the transferring attorney is the one to ask for the transfer cost statement your subsidy application needs.

The 21-day deadline for your home loan and subsidy

The guarantee is due in weeks. Subsidy approval can take longer.

After a sheriff sale the conditions of sale give you a limited time, commonly 21 days, to deliver a guarantee for the balance of the price. If it does not arrive the sale can be cancelled, your deposit is at risk, and you can be held liable for any shortfall when the property is sold again.

Subsidy applications are commonly quoted at a few weeks and sometimes longer. That is why the order matters: get a bond pre-approval and speak to your bank or bond originator about First Home Finance before the auction, so that the only thing left to do after it is submit the signed deed of sale and the transfer cost statement.

If the deadline cannot be met, there is a slower route. An offer made to the bank before the auction, through its instructing attorney, produces a normal offer to purchase on a normal timeline. So does buying a property the bank has already bought in at an earlier auction and is now selling privately. This is general information, not legal advice. Your bank, bond originator or own conveyancer can confirm it for your case.