When you are considering the purchase of a new property, there are certain things to consider. One is the Clearance Certificate.
One of the pitfalls in obtaining a clearance certificate is historical debt.
Section 118 (of the Local Government Municipal Systems Act 32 of 2000) states that the transfer of property may not be registered unless a certificate is produced in which the municipality states that NO fees are due to the municipality regarding the property. The certificate reflects that no fees, rates and taxes are due for a period of two years retrospectively.
The pitfall here is that technically, any fees, rates and taxes owing against the property, back dated two years, is the responsibility of the property owner, even if by some miracle the transfer has occurred into the unsuspecting owners name. The municipality can still sue for the outstanding fees for that specific property and the property could be sold in execution to recover costs.
Legislation is in place which enables municipalities to establish a charge. The charge can be directly linked to the property and even a bond registered against the property does not supersede the fees owed to municipalities.
William Fullard, of Fullard Mayer Morrison Inc, says South African courts have a scenario where we have “statutory hypothec” over parties falling within these circumstances. Fullard says, “this type of statutory mortgage cannot be cancelled as it is essentially not possible to register it and thus conveyance attorneys have no way of assisting buyers in this regard”.
It is advisable to protect yourself in this regard and there are ways to do this.
Have a conveyancer investigate the municipal records against a potential property before you make an offer to purchase or you could do the groundwork yourself. By doing so you could save yourself heart ache and money.
Myroof can assist you in purchasing property, bonds and guide you throughout the process.