Before purchasing a property, it is important to ensure that all the municipal debts in respect of that property have been paid to date.
City of Tshwane Metropolitan Municipality v Mathabathe
Facts of the case:
- Nedbank sold Mathabathe’s property to Lawrence on an auction.
- An attorney (“conveyancer”) was appointed to transfer the property into the name of Lawrence.
- The conveyancer applied to the municipality for a clearance certificate (“certificate”) confirming the outstanding current debt (debt for the last two years) of the property in order to make payment of the debt.
- The municipality provided the conveyancer with a certificate indicating the outstanding total debt, which included the current and the old debt (debt older than two years).
- The conveyancer again requested the municipality to provide her with a certificate confirming only the outstanding current debt, to no avail.
- An application was made to the court for an order to force the municipality to provide the conveyancer with a certificate confirming the outstanding current debt. The municipality also made an application to court for an order in respect of the payment of the outstanding total debt or an undertaking for payment of the outstanding total debt on transfer of the property.
What the court said:
- In order to transfer a property into the name of another person the municipality has to provide the conveyancer with a certificate confirming that the outstanding current debt has been paid in full.
- In terms of the law the municipality can block a transfer of property by not providing a certificate confirming that there is no outstanding current debt.
- Further in terms of the law the municipality has a lien (right) over the property if there is any outstanding current and old debt. This means that the municipality can, at any time, after obtaining a court order, sell the property on auction and use the purchase amount towards the outstanding current and old debt.
- The court granted the application to force the municipality to provide the conveyancer with a certificate. The municipality’s application was dismissed due to the fact that it has a right over the property in respect of its outstanding total debt and may enforce this right at any time.
- In light if the above, it can no longer be accepted that upon transfer of a property that such property is free from all outstanding debt.
- Despite the municipality having issued a certificate, the old debt of the municipality can still be due and owing. If the old debt is not settled, the property may be sold on auction to recover the outstanding debts, at any time.
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