Good news for New Homeowners: You’re Not Liable for Historical Debt

Clock next to piles of coins with plants shooting out of them next to a wooden house

If you’re a homeowner the last thing you want to be responsible for is the previous owners’ unpaid municipal accounts. The good news is that the Constitutional Court has ruled that property owners can no longer be held liable for their property’s historical municipal debt.

The ConCourt’s recent ruling means that new home owners no longer need to worry about having their municipal services cut off as a result of past owners’ historical debt. In certain cases, property owners were left in the dark when their respective municipalities decided to take action by cutting their services for non-payment of historical charges. Up until recently, as a worst-case scenario, the property may have even been attached and sold in execution.Gavel

The lack of clarity surrounding the Gauteng High Court’s ruling in 2013 was primarily to blame, and had created much confusion and uncertainty, but now that the Constitutional Court has decided to uphold and clarify the ruling, new home owners can purchase without fear of inheriting unexpected outstanding bills.

According to Section 118(1) of the Municipal Systems Act, upon the sale of a property the onus lies on the appointed conveyancer to obtain a clearance certificate in order to ensure that utility and rates bills have been settled by the seller, before the property is transferred. It’s in Section 118(3) of the same act where things were murky. Instead of outstanding municipal debt being charged to the then owner, it was charged to the property and hence it gave municipalities the impression that they could pursue the outstanding debt in an attempt to recoup their losses. And in some cases, they did.

Coins and potato balancing on a spoon on top of a calculator

As a result of the new ruling, it has been made clear that ‘charges upon the property do not survive transfer’.

If you have any questions relating to the above article or with regards to the purchase or sale of your property, feel free to give one of our experienced agents a call. Visit our website or call us on 021 526 3980.

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