The Pretoria High Court recently had to deal with the issue of a new property owner’s liability for historic municipal debts on the property. The judgment provided much clarity and relief.
The Municipal Systems Act determines that a municipality must issue a clearance certificate for transfer of ownership to pass from a seller to a purchaser if rates for the past 24 months are paid up. However, historic debts older than 2 years remain a charge on a property by way of a statutory hypothec created by the Municipal Systems Act.
This caused fears that a new owner would become liable for these debts. But the finding in Mitchell v City of Tshwane Metropolitan Municipality advises, amongst other things, that a municipality loses the hypothec on transfer of the property and the debt does therefore not come to rest on the shoulders of a new owner.
A sensible reprieve indeed!