select
|

New property owners may get saddled with outstanding municipal debts

The whole issue of who is responsible for long-standing municipal debts when properties are transferred has been raised time and again in the South African courts, says Tony Clarke, Managing Director of the Rawson Property Group.

'Traditionally,' said Clarke, 'the position has been that the seller or buyer has only to pay the last two years of outstanding debt to be issued with a Rates Certificate, without which transfer cannot legally take place. This means of pressurizing sellers into meeting their outstanding debts has proved effective in bringing them at least partially up-to-date on their payments, but it still leaves the new owner with the problem of who is responsible for longstanding unpaid debts.'
 
The two year payment provision, said Clarke, was upheld in September 2008 when Judge Blieden of the Johannesburg High Court ruled that Counsel had no right to withhold Rates Clearance Certificates on account of debts going back longer than two years and this approach was confirmed by the High Court of Cape Town and later by the Supreme Court of Appeal, which, incidentally, also ruled that all documentation relating to the two year debt had to be produced.

'Now, however, a third case (Tshwane Municipality vs. Thomas Mathabata) has ruled that even when the two year payment is met, debts on properties going back longer than two years can be transferred to the new owner. Furthermore, the municipality has the right to attach the property and sell it in execution to achieve payment of those debts.'
 
This ruling, said Clarke, puts new owners in a very difficult position and they have to be warned publicly that from now on it will be essential for sellers to guarantee, in writing, that all debts owing on the property have been paid prior to transfer. This clause, he said, should now be included in all sales agreements


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK