Historically, a property was not allowed to be transferred to a new buyer until a municipal certificate was issued, clearing any debt spanning a two-year period
NEW HOMEOWNERS cannot be held liable for historical municipal debt incurred by previous owners.
This is according to a Constitutional Court ruling handed down by Judge Edwin Cameron, which upheld a ruling by the Pretoria High Court in November last year.
Several municipalities including Tshwane, eThekwini and Ekurhuleni had argued that it was lawful for a municipality to attach and sell a recently purchased property in order to pay debt owed to them. The case was brought by several property owners who opposed this practice.
Historically, a property was not allowed to be transferred to a new buyer until a municipal certificate was issued, clearing any debt spanning a two-year period. However, debts incurred before cut-off became the liability of the new owner, with home and business owners being saddled with years of municipal debt, sometimes as long as 20 years. New owners were denied municipal services until the debt had been paid.
Sol Plaatje Municipality spokesperson, Sello Matsie, described the decision as a landmark ruling.
“We take note of the ruling handed down by the Constitutional Court. We still have to study the details so that we can advise council on how it will affect the municipality.” He added, however, that on the surface, the ruling was “logical”.
“If one person uses services and owes the municipality money, it would be incorrect to expect another person to pay that debt because he or she didn’t incur that debt.”
Matsie pointed out, however, that the transfer of property did not extinguish the debt.
“This ruling does not take away the right of the municipality to pursue the former owner of the property for his or her outstanding debt. We can still take that person to court and get a court ruling to force them to pay the money they owe.”
He explained further that the municipality would also still be required to issue a rates clearance certificate before property can be transferred from one person to the next.
“Most times, the value of the property being sold is higher than the debt owed so as a municipality we can demand that the debt be guaranteed by the attorneys who are doing the transfer. The municipality will not issue a clearance certificate unless the outstanding debt is paid.”