When is a rates clearance certificate required?

A rates clearance certificate is one of the documents required to be lodged in the Deeds Office when there is a transfer of land or change of ownership in respect thereof.

The legal framework governing rates clearance certificates is Section 118 (1) of the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000) and the Deeds Registry Act.

Who obtains a rates clearance certificate?

The conveyancing attorney who has been instructed to attend to the registration of transfer of the property will obtain the rates clearance certificate on behalf of the owner or seller of the property.

The Revenue Clearance Section at the Municipality deals with the issuing of rates clearance certificates, and its main responsibility in this regard is to ensure that all debt which is due by the owner of the property in respect thereof is fully recovered prior to the issuing of the certificate to the conveyancers.

What is the procedure to obtain a rates clearance certificate?

The below procedure is based on the eThekwini Municipality model, and other municipalities may have slightly different requirements and procedures.

• The conveyancers will submit a formal application to the municipality for the issue of rates clearance figures in respect of the property in question. Simultaneously with this application, the conveyancers are required to upload the owner’s latest metro bill. Preferably the bill will have meter readings reflected thereon, but if not then a photo of the latest meter readings should also be uploaded;

• Upon receipt of an application the Revenue Clearance Section will then liaise with the following departments in order to check that there aren’t any irregularities or holds on the account/s:

1. Real Estate;
2. Water;
3. Electricity;
4. Sale in Execution; and
5. Accounts Management.

• Once the above departments have attended to their respective inspections and investigations and have cleared any issues or irregularities, the rates clerk will then calculate the figures and an “eThekwini Municipality Attorneys Report” will be issued to the conveyancers. If there are no issues raised by the respective departments then the approximate turnaround time to issue this is 10 working days;

• According to the eThekwini Revenue Section, the report issued will include, but not be limited to, the follows:

1. Any arrear rates, water, electricity or refuse amounts together with interest on such arrears;
2. The current month’s rates, water, electricity and refuse;
3. 3 months’ advance estimates on rates, water, electricity and refuse;
4. Any amounts still owing in terms of any credit authority agreement or debt relief arrangements;
5. Disconnection and/or reconnection fees;
6. Tampering fees;
7. Any adjustments pending any not yet billed amounts on the account;
8. Amounts received from a sale in execution for legal costs (if available).

• The conveyancers will then peruse the figures and verify them against the seller’s bills so as to ensure that the account numbers correspond with the information received from the rates clerk;

Important to note: We receive a lot of queries from clients as to why the entire assessment must be paid by the seller in advance. The simple answer is that the property is still owned by the seller and it remains his/her debt and responsibility until the date of registration of transfer.

• Once the seller has paid the assessed amount to the conveyancers, the conveyancers will then make payment to the municipality and apply for the rates clearance certificate to be issued. The estimated turnaround time for the clearance certificate to then be issued is 5 working days;

• Once the clearance certificate is received the transfer must be registered in the Deeds Office before same expires, failing which the process will then need to be repeated in order for a new certificate to be issued.

Handy tips for when applying for a rates clearance certificate:

1. Ensure that you timeously provide the conveyancers or alternatively the estate agent with the following:

• The most recent metro bill with readings done, or alternatively, if no readings have been done by the municipality, then recent photos of the readings;
• If you are using a prepaid system, then provide photos of the prepaid meter numbers as well as the prepaid card for electricity and/or water;
• Contact informant of the owner or alternatively occupier of the property in the event that the municipality requires access to the property to inspect the meters.

2. Should you have lodged any objections or appeals to the valuation of the property, this should ideally be finalised before you sell your property as the Real Estate Department will put a block on the system which can cause a delay in the process.

Article by Sandy Naicker