Don’t Let Compliance Derail Your Property Transfer

Selling a property involves more than signing an offer to purchase. There are certain legal and financial obligations that must be met before the property transfer can be registered.

Two important obligations that require attention are the municipal rates clearance and, where applicable, the body corporate or the homeowner’s association levy clearance.

Attending to these early avoids unnecessary delays and complications during the transfer process.

Compliance is a Legal Obligation

Legislation places an obligation on the Registrar of Deeds not to register a property transfer unless the municipal rates clearance figures and body corporate or homeowner’s association clearance figures are settled or satisfactory arrangements are made.

Levy Clearance Certificate

When the property being sold forms part of a sectional title, section 15B (3)(a)(i) (aa) of the Sectional Titles Act 95 of 1986 provides the Registrar of Deeds will not register the transfer unless:

“that body corporate has certified that all moneys due to the body corporate by the transferor in respect of the said unit have been paid, or that provision has been made to the satisfaction of the body corporate for the payment thereof”.

In practice, this means that outstanding levies and other amounts due to the body corporate must be addressed before the required clearance can be obtained.

Municipal Rates Clearance Certificate

Section 118(1) of the Local Government: Municipal Systems Act 32 of 2000 provides that the Registrar of Deeds may not register the transfer of the property unless the municipality in which the property is situated issues a certificate:

“which certifies that all amounts that became due in connection with that property for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties during the two years preceding the date of application for the certificate have been fully paid.”

In practice, the Conveyancer will request the relevant municipal figures during the transfer process. These figures may include outstanding charges as well as estimated amounts payable in advance for the period leading up to registration.

Potential Compliance Issues That Can Delay a Transfer

1. Outstanding municipal accounts and body corporate levies

One of the most common challenges arises when a seller has insufficient funds to settle the amounts required for clearance.

Where there is sufficient equity in the transaction, the seller can apply for alternative funding or, where acceptable to the relevant municipality or body corporate arrange for the outstanding amounts to be settled from the proceeds of the sale.

What can you do?

Sellers should keep their municipal and levy accounts up to date and request updated statements before marketing their properties, where possible. They should also discuss any anticipated clearance costs with their conveyancer in the beginning of the process so that the financial implications can be assessed.

2. Disputed municipal charges and consolidated accounts

Another potential complication arises when a seller disputes the amounts reflected on their municipal or levy account.

Where the owner disputes the amounts claimed, the parties will need to engage with the municipality or their body corporate to obtain a breakdown of the charges, correct any errors or establish the legal basis for the amounts demanded.

What can you do?

Property owners should review their municipal and levy statements regularly and query unexplained charges as soon as they arise.

If a property is being sold, any outstanding dispute should be brought to the conveyancer’s attention as early as possible.

3. Delays in obtaining clearance figures and certificates

Even where accounts are up to date, delays may arise from administrative queries, incorrect account details, outstanding supporting documents or difficulties obtaining the necessary figures from the relevant authority.

These delays can affect the anticipated registration date and may have financial consequences for the parties.

What can you do?

Sellers should provide accurate municipal account details and the information requested by the conveyancer without delay.

Conclusion

Compliance is not just paperwork. It is an important part of every property transfer.

As a property owner, make sure your municipal rates and taxes and, where applicable your levy account is up to date.  

Taking these steps will ensure a smoother property transfer.

Written by: Mpho Molapo
Moderated and approved by: Rohula Kgabu

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