Property buyers be aware…

Property buyers need to be aware of, and protect themselves against, a possible new risk.

In a nutshell, you cannot take transfer of a property until the local municipality issues a “rates clearance certificate” confirming that all rates, service charges, levies etc due on the property have been paid in full.

Your risk comes from the fact that, per a 2013 Supreme Court of Appeal (SCA) decision, 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. In other words, transfer to you can take place even if the seller still owes the municipality for charges pre-dating the two year clearance period.

The result – there could well be “old debt”, perhaps a lot of it (R151,324 in the case in question), still attaching to the property as a “charge” or “lien” upon it after you take ownership. And whilst common sense suggests that the municipality should only be able to sue the original owner – i.e. the seller who sold to you – for these old debts, some legal commentators are interpreting the SCA decision to mean that the municipality could instead choose to sue you, as buyer and new owner of the property. If so, you risk liability for any of the seller’s old debts that haven’t prescribed.

For more information, contacts your Harcourts Beachfront consultant on 041 583 4034Image