On the 29th August 2017, property and business owners alike felt an ocean of calm after the Constitutional Court ruled in the case, Jordaan and Others v City of Tshwane Metropolitan Municipality and Others that historical debts relating to rates and taxes do not survive transfer of ownership. This means that post transfer of the property, the municipality cannot hold the purchaser or successor liable.
Previous problems encountered:
- Prior to this judgment municipalities had the ability to claim outstanding rate payments, from the new owners as far back as 30 years.
- Not all individuals that owned the property 30 years ago would still be the same owners today.
- Previously the property would not be transferred until all debt had been paid in full and a certificate from council was issued
- Outstanding amounts were and still are not easily obtainable by the current or new owners, as this is not public information.
How does the change effect you?
- Municipalities cannot terminate services ie. Water/refuse/sewerage/electricity of the new owner as a result of outstanding debts from the previous owner
- Property cannot be attached as a result of outstanding debts from the previous owner
- Rates clearance certificates cannot be denied due to the historical debt
- Municipalities may institute judgement against previous owners to recover outstanding debt
- Interdicts may be sought to prevent transfer of the property in exceptional circumstances