MUNICIPAL CLEARANCE CERTIFICATE: SUPREME COURT OF APPEAL DECLARES MUNICIPALITIES FORWARD PROJECTION OF RATES INVALID

29 March 2017

Nelson Mandela Bay Municipality v Amber Mountain Investments 3 (Pty) Ltd (576/2016) [2017] ZASCA 36

 

In order to transfer a property one of the requirements is that the registrar of the deeds office requires a municipal clearance certificate in terms of Section 118(1) of the Municipal Systems Act. Municipalities have forced sellers to pay the forward and/or future projections prior to the issuing the said clearance certificate in addition to paying for all debts incurred on the property for the past two years.

EXAMPLES OF CLEARANCE CERTIFICATES FROM CITY OF JOHANNESBURG, CITY OF TSHWANE AND EKURHULENI:

cc-jhcc_coj tshwane

This new ruling effectively gives the right to sellers to refuse to pay for the forward projection of rates on a property in order to obtain a clearance certificate. The intention of the legislator was to ensure that the past two years debt was fully paid when the said clearance certificate is issued by a local municipality: not future debt.

 

The court further held that: “To the extent that the municipality‘s policy is inconsistent with s 118(1), it is ultra vires and void.” This new judgment may force municipalities to correct their procedures and policies. This might also eliminate the stress of people trying to get their refunds back from a municipality.

Please click here to download a copy of the said judgment

FOR FURTHER INFO OR HELP CONTACT THE MUNICIPAL DEBT SPECIALIST