Municipalities are now holding new property owners liable for historical municipal debts, which is debt incurred by the previous owner’s unpaid municipal bills.
Municipalities have begun enforcing this in accordance with their interpretation of Section 118 (1) and (3) of the Municipal Systems Act, reinforced by a Supreme Court of Appeals ruling stating that the debt remained that of the property regardless of whether it was incurred by the previous or current owner.
Typically, a clearance certificate, which was required for the sale, implied the property was transferred clear of debt into the purchaser’s name.
According to 118 of the Local Government Municipal Systems Act 32 of 2000, a transfer of property may not be registered unless a certificate was produced in which the local municipality certifies that all amounts for municipal service fees, property rates and other municipal taxes due in connection with that property for a period of two years, had been paid in full.
“As per the Municipal Systems Act, act 32.2000 Section118, the City is compelled to issue a clearance certificate for the last two years [preceding the] date of application,” said the City of Joburg’s spokesperson for group finance Stan Maphologela.
“Section 118(3) states that a local authority enjoys preference over any mortgage bond, thus meaning that we can collect outstanding debt after a certificate was issued.”
However, because the certificate only covered the two-year period preceding the application, there may still be amounts due on the property which dated prior to that period, Maphologela explained.
Ideally, the buyer should be informed of this debt and the seller, who remained liable for the debt, should use money from the sale to settle the debt.
However, in cases where this did not happen and the city council could not trace the seller, the debt could be recouped from the buyer because the debt remained attached to the property, he explained.
According to Maphologela, property transfers were concluded by conveyancers and they should inform their clients of the laws pertaining to property transfers.
“Property owners know their debt owed to council, and if the purchaser fails to familiarise [themselves] with these facts, we as the city cannot be held liable for their ignorance of the law.”
