select
|

Rates clearance certificate - be aware of the risks

There is a possible risk that buyers of property need to be aware of when the municipality issues the rates clearance certificate on the property they are purchasing, says Annette Evans, regional manager of the Institute of Estate Agents, Western Cape.

This certificate confirms that all rates, service charges and levies due on the property have been paid in full but what is sometimes omitted is that this certificate only goes back two years before the application, she said.

This means that transfer of the property can take place even if the seller owes the municipality for charges dating before the clearance period (which seems unusual, but it can happen).

This old debt can then arise in the form of a charge attached to the property or a lien once the buyer takes ownership. While most would argue that the municipality should be suing the old owner to recover these debts, the Supreme Court of Appeal (SCA) has previously ruled that the municipality must issue a clearance certificate even if the seller only pays amounts due for a two year period prior to the application for a certificate, according to a Bisset Boehmke law update.

In the case presented to the SCA, there was a debt of R151 324 still outstanding. This decision means that the buyer could be sued for the amounts still due, said Evans.

'This should act as a warning to buyers and agents, to check thoroughly what amounts are still owing to the municipality and the seller should be asked for proof before transfer takes place, that all the old debts, as well as any new amounts, have been settled. This provision should, as a precaution, be written correctly into the purchase agreement,' she said.

If there is any doubt on the wording in a contract or the conditions thereof, the buyer should always check with his attorney first before signing any offer to purchase, as once the agreement has been signed by both parties, this contract is binding, reminded Evans.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 05 Dec 2016
      The beautiful Free State city of Bloemfontein is our Daily Five focus with its stunning family homes and wildlife estate properties.
    • 05 Dec 2016
      One of the key questions a property buyer should be asking, on the purchase of their dream home, is how is the immediate area zoned? “All too often one of the major attractions of a property is its current views, which are reflected in the value being asked,” says Craig Robinson who specialises in freehold property in the Green Point and Sea Point areas for Jawitz Properties.
    • 05 Dec 2016
      While a written lease is not a legal requirement when renting residential property in South Africa, it is recommended that everything be committed to writing. This protects both the landlord and tenant should there be a dispute, says Gail Cawood, rentals manager for Knight Frank Residential SA.
    • 05 Dec 2016
      If you’ve been thinking about buying a holiday home – or even a permanent home at the coast – then now’s the time to do so, says Tony Clarke, Managing Director of the Rawson Property Group.
    • 03 Dec 2016
      The property valuation system in Cape Town was recently under question when investigations revealed the value of some properties were increased, which led to increased tariffs and taxes for homeowners.
    • 02 Dec 2016
      The large, farm style home is situated in the sought after Midstream Estate, Centurion is our Property Pick of the day with its stunning design and cosy family atmosphere.
    • 02 Dec 2016
      Much can, and has, been said about Pretoria East - all we can say is that we love this beautiful leafy city. From its traditional homesteads to its vibrant new developing nodes there is something for everyone and we take a look at five current listings from MyProperty that we love!
    • 02 Dec 2016
      We have for some time been saying that smaller is better when it comes to home buying, but that doesn’t mean the smaller home market isn’t slowing down.
        
    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