PROPERTY owners with unpaid bills in one municipality will not be able to buy property in another municipality before settling their outstanding debt.
The SA Local Government Association — which represents 278 municipal councils throughout the country — wants the government to establish 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.
Salga also wants Section 118(b) of the Municipal Systems Act “to be amended to remove the two years’ prescription for payment of outstanding municipal debt in order to issue a municipal clearance certificate to issue property saleâ€.
This means that any municipal debt extending beyond the statutory two-year period will have to be paid by the property owner seeking to sell.
Municipalities are under financial strain and are currently owed R105-billion, with government departments and entities owing R5.2billion, businesses owing R22.7-billion, households owing R56-billion and other ratepayers owing R10.1billion.
While Salga seeks to change the law, the City of Johannesburg has enlisted a specialist firm of attorneys and consultants to recoup R1.82-billion in debt that was not settled after properties exchanged ownership.
Spokesman for the city’s group finance division, Stanley Maphologela, said: “After the clearance figures are issued, our specialised 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 for immediate relief.â€
Maphologela advised prospective buyers to insist that all outstanding debts be settled in full by the responsible parties.
“In order to avoid any future disputes between the seller, purchaser and the municipality, we advise that all estate agents or property transferring attorneys educate prospective buyers — or amend their Offer to Purchase to state that the seller shall, on demand, pay all historic debts to the municipality before or on registration of the transfer,†he said.
Tommy Nel, head of credit at FNB Home Loans, said: “It is not clear how this would change the current property transfer process. As things stand, the seller is required to have a clearance certificate from municipalities and the relevant home owners associations, where applicable, to facilitate transfer to the new owner. Without this, transfer cannot be effected. It is not clear to us how what is being proposed is different to the current practice. We, therefore, don’t see any impact on our business.â€
