Property sellers stuck with rates debt

Posted On Friday, 08 July 2005 02:00 Published by
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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

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