Buying a Home? Guard Against Historical Municipal Debt

14 Mar 2016

The recent findings by the Supreme Court of Appeal (City of Tshwane Metropolitan Municipality vs PJ Mitchell (38/2015) [2015] ZASCA 1) that a new owner of a property can, in certain limited circumstances, be held liable for historical municipal debt of a previous owner has raised many concerns and questions within the property industry.

“With the collaboration of the municipality and the transferring attorney, it is possible to ensure all historical municipal debt is paid in full at the time of the sale,” says Snyman.
This is according to Jansen Snyman, Founding Director of Snymans Incorporated Attorneys, who says in response to this, the City of Johannesburg issued a statement reiterating the processes in place to ensure all municipal debt is paid in full at the time of a property sale.

This involves the City of Johannesburg informing the relevant transferring attorney of the outstanding balance for municipal costs that are due at the time of the property sale.

The transferring attorney or sheriff involved in the transfer of the property is then responsible for ensuring payment for these costs is made before the remaining proceeds are received by the seller.

Acknowledging the necessity to protect property buyers from the risks of historical municipal debt, Snyman says the City of Johannesburg appealed to attorneys and sheriffs to work together with the municipality in this regard.

“Both the judgment and the statement issued by the City of Johannesburg reinforce the importance of attorneys taking responsibility for checking and ensuring all municipal debts of the previous owner are paid prior to transfer, and that consumers are well informed of the processes and requirements for a successful property transfer.”

He says this confirmation by the City of Johannesburg will go a long way to reassure buyers that, with the proper due diligence required in any property transfer, buying property holds no additional risks as a result of the Supreme Court of Appeal’s ruling, and remains a valuable investment.

“With the collaboration of the municipality and the transferring attorney, it is possible to ensure all historical municipal debt is paid in full at the time of the sale,” says Snyman.

“This will greatly reduce the potential risks to buyers and sellers in a property transaction, and we are committed to working closely with municipalities to ensure this is achieved.”