RATES CLEARANCE CERTIFICATES
Before any transfer of immovable
property situated within a Local Authority area can be effected, the particular
conveyance has to certify in terms of Section 78 of the Local Authority Act
(act 23 of 1992) that all rates leviable in respect of such immovable property
and all the fees, charges and other moneys due to the Local Authority in
respect of any service, amenity or facility supplied to such property in terms
of the said Act, inclusive of any availability charge and minimum charge
provided for in Section 30(1)(u) of the said Act has been paid up to and
including the date of registration thereof.
The Conveyancer attending to the
transfer must sign a certificate in the Deeds of Transfer confirming the above
and therefore the Conveyancer takes full responsibility that sufficient
provision has been made for the settlement of the Seller’s liability towards
the Local Authority. The Conveyancer is
obliged to make sure that there are either sufficient surplus funds from the
proceeds of the sale to cover the outstanding debt or the owner must provide
additional funds to cover the debt.
It is interesting to note that Section
78 of Act 23 of 1992 does not only refer to the so called “rates and taxes” but
also includes consumable items like the supply of electric current and
water. This means that even if the owner
was not the consumer of the electricity and water for example in case of a
tenant, the owner of the consumable items and the necessary clearance
certificate will not be issued unless the full outstanding amount has been
settled. Owners of immovable property
should therefore make sure that their tenants are indeed keeping up with their
respective payments towards the Local Authority.
Special care should be taken where the
purchaser takes over the member’s interest in a property owning Close
Corporation or Company. That particular
Close Corporation or Company remains the owner of the immovable property and
therefore also remains responsible towards the Local Authority for the full
municipal account notwithstanding the change in member’s interest or shares.