THE City of Johannesburg will not pin liability for historical property debt on new owners.
Instead, it will insist that a previous owner settle all outstanding debt against a particular property prior to it being transferred to the new buyer. The group finance department has hired a firm of consultants and attorneys to do this.
This move goes against a recent Supreme Court of Appeal ruling, which found that a present-day owner could be held liable for old debt incurred against a property for up to 30 years prior.
The city, insisting on its new approach, has collected R730m in historical debt against 25,033 properties.
Spokesman for the city’s group finance department Stanley Maphologela said the city would write to transferring and conveyancing attorneys to inform them of steps to be taken to demand payment of outstanding debt, and if not effected, Johannesburg will approach the courts to enforce payment.
“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 section 118 of the Systems Act,” said Mr Maphologela.
“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.”
Prospective buyers are now able to directly approach the city for details on the entire debt against a property.
“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 seller, buyer and estate agent). The buyer also has the right to request a copy of the seller’s municipal account from the estate agent before entering into the contract.”
The move by Johannesburg is in line with efforts by the South African Local Government Association (Salga) — representing 278 municipalities — to ensure that property owners with unpaid bills in one municipality will not be able to buy property in another municipality before settling their outstanding debt.
Salga has called for the establishment of a central database of residential property owners and business owners with outstanding rates and services bills. The database will be linked to the issuing of municipal clearance certificates.
The association has further called for sellers of property to be made liable for debt owing beyond the two year prescribed period.