A group of disgruntled property owners and the Johannesburg and Ekurhuleni city councils will go to the Constitutional Court on Wednesday for clarity on bylaws that block property sales until tenants' outstanding utility bills are settled.

The landlords are against Section 118 (1) of the Local Government Municipal Systems Act which they say empowers local authorities to embargo the transfer of property by withholding a clearance certificate until the tenants' debts are paid.

They also want a ruling on provisions in the Local Government Ordinance and by-laws that leave landlords responsible for debts they did not incur, sometimes leading to the utilities being cut off until the bills are paid.

They believe these bylaws deprive owners of property rights in conflict with Section 25 in the Bill of Rights.

The landlords have formed an umbrella organisation called the Transfer Rights Action Campaign (TRAC) and will be represented by constitutional and administrative law attorney Robert Martindale.

"If the court rules that certain parts of Section 118 of the Local Government Municipal Systems Act are unconstitutional, it would have serious consequences for municipalities," a statement by TRAC said.

"Not only will local authorities be forced to change their credit control strategy and administration immediately to recover arrears from defaulting tenants, but it would have to refund millions of rands recovered unlawfully from landlords."

TRAC said it had no problem with owners being forced to pay for rates and services they have been directly contracted to pay, but believed that local authorities were "acting powerless" in collecting tenant arrears.

The case was initially launched in the High Court in Johannesburg but because of the implications for all municipalities and property owners, the matter was referred to the Constitutional Court for adjudication.

According to TRAC, the Johannesburg Council has argued that these measures are needed to control and reduce enormous municipal debt which puts the viability of municipalities at stake.

TRAC said that it believes that the causes of the arrears are shortcomings of revenue administration and billing systems, poor metering systems, unreliable customer data and high government arrears and not simply non-payment.

"The legislation, which became law on March 1 2001, makes landlords easy targets for cash collection thereby providing municipalities with less incentive to collect debts from tenants. As the law has been interpreted, a landlord is forced to settle utility debts before receiving a rates clearance certificate allowing the sale of the property.

"In some cases, municipalities have cut off power and water and refused to open new accounts for tenants until the landlord has settled the debt. Some municipalities have recently adopted new credit control strategies forcing landlords to sign a consumer contract specifically accepting liability for their tenants' debts and refusing to open water and electricity accounts in the tenant's name.

These new strategies may be designed to circumvent any order that the Constitutional Court might make," TRAC said.

The Johannesburg council could not comment immediately.

Sapa