KVV Inc
  • About Us
    • Meet The Team
      • Staff Photos
    • KVV Masters
    • Blog
  • Registration Process
    • I Am a Buyer
    • I Am a Seller
    • I Am An Agent
  • KVV Training Centre
  • KVV TV
  • KVV Cares
  • Contact Us
  • +27 87 351 2022

How the “Historical Rates” Judgment Affects You

Home / Blog / Property Law / How the “Historical Rates” Judgment Affects You
October 18, 2017
Property Law

“It is declared that, upon transfer of a property, a new owner is not liable for debts arising before transfer from the charge upon the property …” (Constitutional Court Order)


How does the recent Constitutional Court decision on “historical rates” affect you in practice?

Understanding the issue

At issue was that some municipalities would force new property buyers to pay the seller’s “old” municipal debts (rates, municipal services etc).  So you could buy a house thinking that all you had to pay was the purchase price and transfer costs, and end up having to pay old municipal debts run up by previous owners.

We’re talking potentially big money here – R6.5m in one of the cases in question.  And you had to cough up or face losing your home to a sale in execution, as well as threats to disconnect electricity and other services.

Property owners 1, Municipalities 0

In a major victory for property owners, a 2016 High Court decision held that procedure to be unconstitutional.  And whilst the Constitutional Court on appeal said there was actually nothing unconstitutional about the legislation in question, it also confirmed that municipalities cannot use it to collect pre-transfer municipal debts from the new owner.

So how does that decision from our highest court affect you?

Buyers

You are no longer the “soft target” for municipalities and you no longer risk having to pay the seller’s historical debts; you are only liable for rates etc after you take transfer.  The other side of the coin is that municipal debt write-offs generally are bound to increase, and those losses will be passed on to us all as consumers.

Sellers

To avoid delays in transfer, keep all municipal accounts up to date. Remember you cannot pass transfer without a “clearance certificate” certifying payment of rates etc due for the past 2 years. Debt older than 2 years cannot now be claimed from the buyer so expect municipalities to be extra vigilant from now on in collecting arrear rates and service accounts as they arise.  Get legal help immediately if your municipality demands payment of debts older than 3 years – rates prescribe after 30 years, but other debts survive only 3 years (unless of course prescription is interrupted by for example an admission of liability or the service of a summons).

Agents

This decision has been touted as positive for the property market generally and it certainly will reassure any potential buyers holding back from making offers for fear of having to pay huge hidden municipal debts.

Municipalities 

“Historical debts”, said the Court, “exist only because municipalities have not recovered them”.  Every municipality is obliged to –

  • “Collect all money that is due and payable to it”,
  • “Implement a credit control and debt collection policy”,
  • “Send out regular accounts, develop a culture of payment, disconnect the supply of electricity and water in appropriate circumstances, and take appropriate steps to collect amounts due”, and
  • “For the sake of service delivery … do everything reasonable to reduce amounts owing”.

You have, in the Court’s words “a full-plated panoply of mechanisms enabling efficient debt recovery” – use them to stop arrears building up in the first place.

© LawDotNews

Share
Previous Post
Security Complexes: Can You Use Telkom Ducting for Fibre?
Next Post
Creditors and Debtors: Important New Prescription Judgment
Recent Posts
  • A Note from our Director
  • Building a Home in 2021: The Dangers of Not Being NHBRC Compliant
  • Life Partners – You Need a Will and a Cohabitation Agreement!
  • Don’t Fall Victim to a Ponzi Scheme in 2021!
  • Your Website of the Month: Starting a Business in 2021
Contact Info

Ground Floor, Block D, Jigsaw Park 7 Einstein Road Highveld Techno Park, Centurion
Phone: +27 87 351 2022
Fax: (012) 655-1053

Get Directions
Archive
  • January 2021
  • December 2020
  • November 2020
  • September 2020
  • August 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
Categories
  • Bank And Financial
  • Business
  • Corporate
  • Criminal Law
  • Debt
  • Delict and Civil Claims
  • Delit / Civil Claims
  • Employment and Labour Law
  • Employment Law
  • Family Law
  • General Interest
  • Insolvency
  • KVV News
  • Litigation
  • News
  • Property
  • Property Law
  • Road Traffic
  • Tax
  • Trusts
  • Uncategorized
  • Wills and Estates
Pages
  • About Us
  • Blog
  • Blog Archive
  • Blog Classic
  • Contact Us
  • Cost Calculator
  • How We Work
  • I Am a Buyer
  • I Am a Seller
  • I Am An Agent
  • KVV Inc – Your Property Partner
  • KVV TV
  • Master Lounge
  • Meat the Team
  • Meet The Team
  • Registration Process
  • Shortcodes
  • Staff Photos
  • Testimonials
  • Training Centre

Designed by eMSDigital Group © 2019. All Rights Reserved

  • About Us
  • Registration Process
  • KVV Training Centre
  • KVV TV
  • KVV Cares
  • Contact Us
  • About Us
    • Meet The Team
      • Staff Photos
    • KVV Masters
    • Blog
  • Registration Process
    • I Am a Buyer
    • I Am a Seller
    • I Am An Agent
  • KVV Training Centre
  • KVV TV
  • KVV Cares
  • Contact Us