Further to unpaid municipal debts older than 24 months:
A recent High Court judgment (Stand 278 Strydom Park (Pty) Limited v Ekurhuleni Metropolitan Municipality) confirmed that:
- new owners of property are not liable to the municipality for any arrears or charges on accounts held by previous owners of that property; and
- the municipality is not permitted to terminate the supply of services to the new owner on the ground that previous owners of the property are indebted to the municipality.
This case brings some relief to those owners who have been in lengthy disputes with their municipality regarding debt incurred by the previous owners of the property.
What this means for purchasers
When a property is sold and in the process of being transferred to the purchaser, it frequently happens that the municipality does not recover all of the arrears from the seller but nevertheless issues a rates clearance certificate to the transferring attorney.
After transfer of the property to the new owners, the municipality then realises that the previous owners’ rates and taxes in respect of the property are still in arrears. The municipality then attempts to hold the new owners of the property liable for payment of the historical debt.
The new owners, unaware of their legal rights, are bullied into making payment arrangements with the municipality to pay off the previous owners’ debts because they fear that their water and electricity supply will be cut off, or worse, that they might lose their property.
What to do in the event that the municipality threatens the new owners with disconnection
Remember that the purchasers are not liable for the previous owners’ municipal debts and it is unlawful for the municipality to cut off water and electricity supply to the property because of such debt.
Purchasers are advised to seek urgent legal advice in the event that they are faced with letters of demand for the payment of the previous owners’ municipal debts and/or threatened with the termination of their municipal services.
From Bissets, Boemke and McBlain Attorneys, Notaries and Conveyancers (May 2015)