Property sellers stuck with rates debt

Posted On Friday, 08 July 2005 02:00 Published by
Rate this item
(0 votes)
People buying and selling property in the metro are up in arms about a bylaw which results in the previous property owner's continuing to receive rates accounts for as long as a year after the sale
By Max Matavire

People buying and selling property in the metro are up in arms about a bylaw which results in the previous property owner's continuing to receive rates accounts for as long as a year after the sale.

The Nelson Mandela Metro on Thursdday acknowledged the problem and said it had discussed the matter with conveyancers.

It has asked them to include the service charges incurred after the property is sold in their transfer charges to the new owner.

In a letter to all attorneys and conveyancers, the metro says:

"General rates is an annual charge that is raised on July 1, every year. Because the amount payable is in most cases fairly large, the municipality allows ratepayers to pay it off in 12 monthly instalments.

"The debt, however, remains one undivided debt and is payable as such. This is also spelt out in the municipality?s customer care and revenue management bylaw.

So the owner of a property on July 1 in a given year is liable for the general rates in respect of that property for the entire financial year.

"When the transfer of a property is registered early in the new financial year, for example July 5, the old owner is therefore still liable for the general rates for that entire financial year."

The municipality acknowledges: "This creates a problem, as the old owner is usually under the impression that such rates will be charged to the account of the new owner."

Conveyancing attorneys said on Thursday the bylaw was "a problem". They were handling a lot of complaints from disgruntled property owners. One attorney even said what the municipality was doing was illegal.

The attorneys said the municipality?s slow pace in updating its records was the main cause of the problem. They said details of the new owners should immediately replace those of the seller.

Dannie Christian, metro budget and treasury business unit manager (revenue management and customer care) said:

"Every year, during May and June, we send letters to transferring attorneys advising them of the problem and requesting them to advise their clients accordingly."

Christian said the issuing of a clearance certificate by a local authority to a conveyancer to effect transfer of property to a new owner was governed by Section 118 of the Local Government: Municipal Systems Act of 2000.

The Act requires that all amounts due - service fees, surcharges, property rates and other municipal taxes, on date of application, in connection with that property must be fully paid for the preceding two years.

"This section cannot be waived or modified by a municipality," Christian said, The accounts were sent to the person who was the registered owner of the property at the time the charges were levied.

Christian said attorneys handling transfers normally, when concluding the transaction, assigned the amount due on a pro rata basis between the buyer and seller.

He said, however, that some attorneys were not prepared to get involved in this matter.

"The municipality," Christian said, "sees the assigning of charges on a pro rata basis as a private matter between the buyer and the seller.

"Normally, a sale contract concluded between a buyer and seller makes specific provision for assigning such charges on a pro rata basis to the buyer and seller.

"It is suggested that the contract also contain a clause covering any future charges which may become due after the date on which the certificate is issued."

The problem was "a legislative issue", Christian said.

Eastern Province Herald

Publisher: Eastern Province Herald
Source: Inet Bridge

Most Popular

Property sales and development in Cape Town’s East City precinct healthy despite pandemic

Sep 01, 2020
Just nine months after launching to market, 63% of The Harri, a new 48-unit apartment…

Realising the potential of embattled Cape York

Sep 01, 2020
Previously owned by the Bank of Mozambique and abandoned, Cape York had been hijacked and…

Minister de Lille applauds Women in Construction at 2020 ERWIC Awards

Aug 31, 2020
Patricia De Lille
“Women in SA need to be given the opportunity to participate meaningfully, including in…

Business parks thrive as industrial tenants seek value

Sep 10, 2020
Rael Levitt
Business parks are coming into their own as a viable asset class in commercial real…

Creativity on the march across retail landscape

Sep 14, 2020
Belinda Clur MD
Creativity is on the march across the retail landscape as sector players get to grips…

Please publish modules in offcanvas position.