A recent decision by the Supreme Court of Appeal which found that the buyer could be held liable for historical property debt accrued by the previous property owner, caused major concern in the property fraternity.
However, the City of Joburg has intensified its effort to ensure that new property buyers do not inherit historical debt for rates and services from the previous owner.
To date the City is owed millions on outstanding rates and taxes by customers who suddenly disappeared after having sold their properties.
Meanwhile the City is communicating with transferring and conveyancing attorneys advising them of the legislative requirement. The City would still apply its mandate to collect all debts outstanding when a sale has taken place prior to the transfer of the property to the buyer.
“Where a sale of the property takes place, a demand will be made to the transferring attorneys and sheriffs for payment of outstanding municipal debt. This is in keeping with Section 118 of the Systems Act,” said the City’s group finance, communications and stakeholder relationship spokesperson, Stanley Maphologela.
“It is very important for the transferring and conveyancing attorneys to
advise their clients about the historic debt which is attached to the
property they intend purchasing,” added Maphologela.
He warned that if payment of the full outstanding debt was not effected in the transfer process or in the event that attorneys refuse to comply with the policy, the City would apply to the Court in order to ensure the municipality is paid what is due when the property is sold.
The City has however, saved home buyers a staggering R730 million in historical debt. “The debt has been recovered from about 25 033 properties, by ensuring that the debt was settled with the seller and not transferred to the new unsuspecting buyer,” he explained.
In terms of Local Government: Municipal Systems Act, No. 32 of 2000, municipalities are obliged to collect money payable to them in respect of property rates and taxes and provision of municipal services.
The buyer has the right to approach the City to obtain the municipal statement of the seller, on condition that they can produce a valid offer to purchase document which is signed by all parties, that being the seller, buyer and estate agent.
Details: City of Joburg, 011 358 3420.
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