Historical municipal debt: Good news for new property owners.
Category Property News
Imagine buying a new home, moving in, only to discover that you owe thousands of rand in historical debt that the previous owner racked up? And the worst thing is that the debt is legally now yours. Not cool.
Luckily, our courts corrected this little legal faux pas, and in August The Constitutional Court ruled that new home owners will no longer be held liable for historical debt “left over” by previous owners.
The ruling will bring relief to both home and business owners, many of whom have been saddled with previous owners’ historical debts, some of it dating back 20 years. Many owners have even been denied municipal services because of its long-standing debt, suffering blackouts and water cut-offs. Through no fault of their own.
The ruling delivered by Justice Edwin Cameron found that on transfer of a property, a new owner is not liable for old municipal debt. The courts upheld the ruling made last year in Pretoria, confirming in the main that the liability of the old municipal debt rests with the previous owner.
In the past a property could not be transferred to the new owner until they got a municipal certificate that cleared debt spanning two years or less. But, once the debts had surpassed the two-year cut off, they then become the liability of the new owner. If these debts are not paid, the the municipality was then permitted to attach and sell the property to settle the debt.
Another ruling made by the court was that should municipalities wish to recover arrears from property owners, they would have to register the arrears against the property title deeds.
Author: Helen Ward