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What Happens To The Municipal Account After A Property Sale?

new home owners

It is incredibly exciting to receive the news from your Estate Agent that your house has been sold to an approved buyer. However, there are still a few steps that need to take place before the money lands in your account, and only once the transfer has been registered should you start concerning yourself about how the municipal accounts should be handled.

Each Municipality in South Africa works slightly differently, and there may be a few minor changes from time to time. Your Conveyancer or Transferring Attorney will keep you abreast of any important changes. Only once you receive confirmation that your property has been registered in the new owner’s name, can you make a trip to the municipal offices to sort out the account. It should be noted that the Purchaser must first open their own Municipal account before you can close yours.

What documentation does the Municipality require to close an account?

You, as the Seller will need to present the following documentation to the Municipality:

  • A letter from your Conveyancer or Transferring Attorney confirming that the transfer has indeed taken place.
  • A utility bill reflecting your municipal account number.
  • Your ID document.

You will then be required to pay all, if any, outstanding monies due to the Municipality before you can close your account. In a perfect world, It should take the Municipality about two to three weeks to close your account, after which you should no longer receive further charges from them. However, there are no guarantees as to this timing.

If there is any money owed to you by the Municipality, it may take quite a long time to process. Adjustments are only made once the account has been closed. These adjustments are performed by different departments within the Municipality, which is why they can take some time.

To obtain your refund, you will generally need to address a letter to the relevant Municipality requesting that the applicable refund be paid out to your Transferring Attorney. It may also be necessary to include both your and the Purchaser’s details, a description of the property and when it was transferred. You will need to provide the receipt of clearance fees paid and a copy of your ID. The Municipality will pay the refund to the Transferring Attorney to avoid the occurrence of fraudulent transactions. The Transferring Attorney will then pay the money over to you once they have received the refund.

As the Purchaser, the Transferring Attorney will notify you once the property has been registered in your name. They will also send a letter to the relevant Municipality informing them that the property has changed hands and confirming that registration has taken place.

The Deeds Office is then required to send the information to the Municipality within ten weeks of the property registration so that they can update the records on their system. Failure on the part of the Municipality to perform the record update is typically where a problem arises, and why the Seller must close their account and you, the Purchaser open a new account.

What documentation is required to open a Municipal account?

For the Seller to close their account, you will first need to open a new account as the Purchaser of the property. To do this requires you to visit the municipal offices, together with the following documentation in hand;

  • A letter from your Conveyancer or Transferring Attorney confirming that the property has been transferred into your name.
  • Your ID document.

Your new account number will be issued to you, and it is at this stage that you should notify the Seller that you have successfully opened a municipal account. Your action will enable the Seller to close their account.

What are my liabilities in terms of historical municipal debt?

Section 118(3) of the Local Government: Municipal Systems Act stipulates the following;

“An amount due for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties is a charge upon the property in connection with which the amount is owing and enjoys preference over any mortgage bond registered against the property.”

Municipalities interpreted this Act that new homeowners assumed the historical municipal debt of the previous homeowners, and a Clearance Certificate could only be issued to the new owner once the debts for the previous two years had been cleared.

Bearing in mind that the foundation upon which an economy is established is the concept of private ownership of property, this interpretation by the Municipalities impacted on new home owners, in that they were left without water, electricity and refuse services. It also violated Section 25(1) of the Bill of Rights which provides that;

“25(1) No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.”

In August 2017, the Constitutional Court handed down judgement that new homeowners may not be held responsible or liable for historical municipal debts incurred by the previous home owner under Section 118(3) of the Local Government Municipal Systems Act.

This means that as the Seller, you are still responsible for all your municipal debts, and if you are the Purchaser you no longer need to worry about being held liable for somebody else’s bills. Should you have any questions or require assistance regarding property transfers, AED Attorneys have expert conveyancers who have established notable relationships with all the various municipalities. These relationships stand them in good stead when it comes to advice and assistance with property transfers.

AED Attorneys offer their clients a very useful tool in the form of a helpful online link which allows you to view the progress of your property transaction.

They are situated in the suburb of Helderkruin in Roodepoort. For friendly and efficient conveyancing services, contact AED Attorneys. *AED Attorneys understands that every situation is unique, and although they strive to ensure that the information contained herein is accurate at the time of publishing, it cannot be guaranteed to be without errors or omissions. As a result, AED Attorneys, its employees, independent contractors, associates or third parties will under no circumstances accept liability or be held liable, for any innocent or negligent actions or omissions in this article, which may result in any harm or liability flowing from the use of or the inability to use the information provided.