Can I be held ransom with a rates clearance certificate for future municipal debts?

“I’m in the process of selling my house. When I requested a property rates clearance certificate from my municipality they requested me to pay the estimated rates until the end of their financial year, which would be months after my house has been transferred to the new owner. Surely I can’t be held ransom for these future rates just because I need a rates clearance certificate?”

In short the answer according to a recent Supreme Court of Appeal case is “no,” you cannot be held liable for payment of the property rates for the entire financial year of the municipality when requesting a rates clearance certificate. 

In the case of Nelson Mandela Bay Municipality v Amber Mountain Investments 3 (Pty) Ltd the municipality required Amber Mountain Investments to pay rates from 1 July 2009 until the end of its financial year, which would be a few months after the date of the registration of the property transfer. Amber Mountain Investments paid the amount of R2 281 014.68 under protest in order to obtain the rates clearance certificate needed for lodgement at the deeds office to register the transfer. However, they were not happy with the fact that they were accountable for R1 066 532.00 more than was actually due and took the municipality to court.

The question the court had to consider was whether a property owner in the case of a sale of property, is liable to pay rates calculated until the end of the financial year of the municipality or until date of registration of the property transfer?

The court held that the intention of the legislature was clear from Section 118 of the Municipal Systems Act that municipalities were only entitled to recover municipal debts due two years prior to the date of application for the clearance certificate, and that the municipality was not entitled to recover future municipal debts for periods which extended beyond this date, irrespective of whether the municipality had a policy in place which determined otherwise. The court accordingly found in favour of Amber Mountain Investments.

If your municipality is accordingly asking you to pay rates estimated until after the date of application for the rates clearance certificate, you should ask your attorney to assist you to bring the outcome of this case to the municipality’s attention.

July 14, 2017
Developers caught off guard with sectional title costs

Developers caught off guard with sectional title costs

In the recent case of Club Kerkira (Pty) Limited v Trustees of Club Kerkira Body Corporate and Others (D11451/2021) [2024] ZAKZDHC 40, the KZN High Court had to clarify the position as to whether the holder of a real right of extension (in this case the developer) had a responsibility to contribute towards the maintenance costs of the sectional title scheme.

See no evil, speak no evil: reporting misconduct

See no evil, speak no evil: reporting misconduct

Enforcing workplace rules frequently relies on employees reporting misconduct that they have witnessed by fellow employees to their employer. This is vital for maintaining workplace discipline and ensuring that employees adhere to the employer’s rules. But what is the worst that can happen to an employee who elects to protect a fellow employee by keeping quiet about their transgressions?

Cast your nets and navigate the waters of phishing and whaling

Cast your nets and navigate the waters of phishing and whaling

With the digital world evolving at unimaginable speeds, cybercriminals are cashing in as they attack individuals and businesses without constraint from virtually anywhere. South Africa and the African continent are coming under heavy fire from cyber criminals as growing economies expand their internet accessibility and so open new and vulnerable targets for cyber-attacks. In this article, we look at a form of cyber-attack called “phishing” with its variants and what you should look out for.

Sign up to our newsletter

Pin It on Pinterest