This despite a recent decision by the Supreme Court of Appeal in a case involving the City of Tshwane and a property owner which found that the buyer could be held liable for the outstanding property debt.
The City announced they have saved home buyers R730 million in historical debt by fulfilling their directive. The City’s group finance spokesperson, Kgamanyane Maphologela, said this debt had been recovered from about 25 033 properties by ensuring that the debt was settled by the seller and not transferred to the new, unsuspecting buyer.
Maphologela said the City was doubling its efforts to protect future homeowners by ensuring that they started with a clean slate. “In an effort to ensure that the new homeowner [buyer] does not inherit the historic debt for rates and services from the previous owner [seller], the City is [informing the] transferring and conveyancing attorneys, advising them of the legislative requirement,” he said.
Maphologela added that a specialised firm of attorneys and consultants had been appointed to ensure that all outstanding monies on properties were collected before the property was transferred from the seller to the buyer.
“Many of our clients, who are sometimes first-time buyers, are often caught by surprise when they face the huge debt that has accumulated under the previous owners. Now we want to ensure that we collect all the outstanding debt from the seller before the transfer of property happens so as not to negatively affect the new buyer.”
However, Maphologela admitted that the City was owed millions of rand on outstanding rates and taxes by customers who suddenly disappeared under the radar after having sold their properties. He said it had always been the norm that the City would issue the transferring attorney with a clearance certificate in terms of the Municipal Systems Act.
Firstly, a clearance figure is provided by the City to the transferring attorney which includes all outstanding money on the property’s municipal account for the past two years preceding the date of application, as well as four months projected consumption, and any other monies attached to the property. Once this amount is paid, the City can then issue a clearance certificate.
Maphologela stated that it was very important for the transferring and conveyancing attorneys to advise prospective buyers about any historic debt attached to the property.
Furthermore, the buyer has the right to approach the City to obtain the municipal statements of the property on condition that they produce a valid offer to purchase which is signed by all parties, being the seller, buyer and estate agent.
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