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14/03/2016: City saves property buyers millions of historical debt
14 March 2016
The City of Johannesburg has saved home buyers a staggering R 730 million of a historical debt. 

The City’s Spokesperson Kgamanyane Maphologela says the debt has been recovered from about 25 033 properties, by ensuring that the debt was settled with the seller and not transferred to the new unsuspecting purchaser.

Maphologela says the City is doubling its efforts to protect the home buyers, by ensuring that they start on the clean slate. In an effort to ensure that the new home-owner (buyer) doesn’t inherit the historic debt for rates and services from the previous owner (seller), the City is writing to transferring and conveyancing attorneys advising them of the legislative requirement.

Maphologela says a specialized firm of attorneys and consultants has been roped-in; to ensure that all collections are concluded before the property is transferred from the seller to the buyer.

“Many of our clients who are sometimes first-time buyers, are often caught by surprise when they face the huge debt that has accumulated under the previous owners (sellers). Now we want to ensure that we collect all the outstanding debt from the seller before the transfer of property happens as not to negatively affect the new buyer,” says Maphologela.

In terms of Section 96 of the Local Government: Municipal Systems Act, No. 32 of 2000, municipalities are obliged to collect monies payable to them in respect of property rates and taxes and provision of municipal services. In compliance with its statutory obligations the City has strict mandate to collect all outstanding debts on a property when sold.

The City is owed millions of rand on outstanding tax and rates by customers who suddenly disappear under the radar after having sold their properties.

It has always been a norm that the City would issue the seller with the Clearance Certificate in terms of the Municipal Systems Act 32 of 2000 Section 118 (1). This meant the City should issue the Clearance Certificate if the debt for the preceding two years is paid. But this did not mean the owner is not liable for the outstanding debt.

“It is very important for the transferring and conveyancing attorneys to advise their clients about the historic debt which is attached to the property they intend purchasing,” says Maphologela.

Furthermore, the buyer has the right to approach the City to obtain the municipal statement of the seller (property in question), on condition that they can produce a valid Offer to Purchase document which is signed by all parties. The buyer also has the right to request a copy of the Clearance Certificate from their transferring attorneys before entering into the contract. The Clearance Certificate shows both the clearance figures as well as the full outstanding amount.

Maphologela says although a recent decision by the Supreme Court of Appeal in a case involving the City of Tshwane and property owner, found that the buyer can be held liable for the old debt, however the City of Johannesburg will still apply its mandate to collect all debts outstanding when a sale has taken place prior to the transfer of the property to the buyer.

“Where a sale of the property takes place, a demand will be made to the transferring attorneys and sheriffs for payment of outstanding municipal debts, this in keeping with the Section 118 of the Systems Act,” says Maphologela.

Maphologela warns that if payment of the full outstanding debt is not effected in the transfer process or in the event that attorneys or sheriffs refuse to comply with the policy, the City will apply to the Court in order to ensure the City is paid what is due when the property is sold.

Issued by:

Stanley Maphologela
Communications and Stakeholder Relationships
Group Finance
Phone: 011 358 3420
Fax: 011 358 3639
Cell: 060 633 0494
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Interview scheduling, media queries and policy information
Nkosana Lekotjolo
Phone: 011 628 4563
Cell: 072 817 2569
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Last Updated on 14 March 2016