Cape Town – The Constitutional Court judgment on Tuesday that new home owners are not liable for historical debt taken over from previous owners brings to an end a long period of confusion “and no little controversy” in the property industry since 2013, according to Berry Everitt, CEO of the Chas Everitt International property group.
In 2013 the North Gauteng High Court ruled against the Municipality of Tshwane in a case concerning the process of obtaining and lodging a municipal clearance certificate. It ruled at the time that, if there was historical debt, the property could be transferred to the new owner, but the seller would remain indebted to the municipality for historical debt.
The Municipal Systems Act stipulates only that the municipality must issue the certificate if the outstanding debt for the two years immediately preceding the date of sale has been paid in full.
“Today’s ruling by the Constitutional Court means that new home owners will no longer have to worry about being held liable for historical debt incurred by previous owners, and having their municipal services cut off as a result, or possibly even having their property attached and sold in execution,” said Everitt.
In terms of the act, conveyancers are obliged to obtain such clearance certificates before properties can be transferred to new owners. This is to ensure that any rates and utility charges owed to a local authority by the property seller have been paid and are up to date.