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23/07/2015: City’s net closing on evasive property sellers
23 July 2015
The City of Johannesburg is closing the net on property sellers who evade settling their debts on their properties before and after selling them.
In an effort to collect the outstanding money owed to the City, 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 old owner to the new one.
 
In terms of the relevant Government Ordinance and Systems Act, the City has a strict mandate to collect all outstanding debts on property when sold.
 
Spokesperson for the City’s Group Finance Cluster Stanley Maphologela says the City will step up its efforts to collect the outstanding amounts due to the City by enforcing legal instruments. 
“After the clearance figures are issued, our specialized firm will contact the relevant transferring attorneys or sheriffs advising them of the outstanding amounts. If payment is not effected to pay the full outstanding debt, the City will apply to the High Court of South Africa for immediate relief,” says Maphologela.
 
The City is owed millions of rand on outstanding tax and rates by customers who disappear under the radar after having sold their properties.
 
It has always been a norm that the City would issue the seller 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 Maphologela warns that the City will be using Section 118 (3) to recover the moneys owed to it from those selling their properties.  
“Section 118 (3) furthermore states that the sums owed to municipality are a charge upon the property,” reads Section 118.
 
“In order to avoid any future disputes between the seller, purchaser and the municipality, we advise that all estate agents or property transferring attorneys to educate potential or prospective buyers or amend their Offer to Purchase to state that the seller shall on demand pay all historic debts to municipality before or on registration of the transfer,” says Maphologela.
 
Maphologela further explains that there is a false belief amongst many that the issue of a clearance certificate is confirmation that all debts on the property have been fully repaid by the seller. 
 
“This is not the case. Only the debts for the preceding two years are certified as having been paid, leaving the remaining historic debt still a target for debt recovery by municipalities,” says Maphologela.
Additional information:
Municipal System Act 32 of 2000 (Section 118 (3) reads: “An amount due for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties is a charge upon the property in connection with which the amount is owing and enjoys preference over any mortgage bond registered against the property.  
 
Issued by:
 
Stanley Maphologela
Spokesperson
Communications and Stakeholder Relationships
Group Finance
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