In what The Star calls a major victory for property owners, the SCA has ruled that municipalities cannot demand that property sellers pay in advance for many months of rates, fees and charges before issuing a rates clearance certificate. In a case involving the Nelson Mandela municipality demanding at least R1m in advanced rates for one year from Amber Mountain Investments 3, the company paid under duress for the sale to go through.

The seller believed it was liable only for rates and taxes up to the date of transfer, but not thereafter. Werksmans Attorneys’ Aidan Kenny said: ‘This is good news for the property market when you consider municipalities are often demanding sellers pay up to a year’s rates, fees and charges in advance prior to issuing a rates clearance certificate.’

He added: ‘The ruling now vests sellers with the right to refuse to pay rates and charges for any amount in advance beyond the date of the certificate when applying for a rates clearance certificate. It also imposes an obligation on municipalities to change their policy to comply with the various Acts applicable, forfeiting their right to collect advance rates and charges due in future prior to issuing a rates clearance certificate.’

To transfer a property, the deeds office must be provided with a rates clearance certificate confirming that the charges due to the municipality have been paid to enable the registrar to effect transfer of the property.

Full report in The Star (subscription needed)

Nelson Mandela Bay Municipality v Amber Mountain Investments