The recent implementation of the Municipal Property Rates Act 6 of 2004 is making one of the easiest and fastest growing forms of property ownership, sectional title, far more difficult and less satisfactory, says Tony Clarke, MD of Rawson Properties.
The new act specifies that a sectional title unit has to be issued with a municipal clearance certificate as proof that all its rates and taxes have been paid up to date. Unless this certificate is available, the transfer will be held back.
Previously, these municipal payments were the responsibility of the body corporate, which then billed the members for their share of these sums outlaid pro rata.
Under the new conditions, says Clarke, each unit has to be valued independently by a qualified valuer, who assesses what the unit would sell for on the open market.
When these valuations have not been done, huge delays will almost invariably accompany the process of trying to get the municipal clearance certificate. These delays, says Clarke, are usually not the fault of the seller but are caused by the shortage of valuers. The only way, in most cases, to get a quick solution to the problem is for the seller to pay four months of rates in advance. Once this is done, the municipal clearance certificate will be issued.
Clarke says the new ruling affects existing sectional title schemes and new developments. Quoting a DLA Cliff Dekker Hofmeyr comment on this subject, Clarke says developers are now forced to lodge transfers of as many units as possible in a single batch when they open their sectional title registers. In the past, he says, a single municipal clearance certificate on the land alone was sufficient. If the units are not ‘cleared’ in this way delays will be experienced before the scheme is captured by the municipality and the unit values recorded by the municipal staff.
Right now, says Clarke, it appears that very few municipalities in South Africa are geared up to comply fully with the new act and the issue of municipal clearance certificates almost always causes significant delays.
