November 29, 2016

Good news for landowners

Almie Fourie

On 7 November 2016, the court decision in the case of Jordaan v City of Tshwane Municipality (74195/2013) [2016] ZAGPPHC) brought great relief for new landowners.

In terms of section 118(3) of the Municipal Systems Act, any amount due for municipal charges (i.e. service fees, property rates and all other municipal taxes) is a charge against your immovable property and if any such amount is due, owing and payable to a municipality, such municipal debt enjoys preference over any mortgage bond registered against your property. Accordingly, the section provides that all and any outstanding municipal debt remains a charge against the property, even after it changes hands.

This is a form of security that the municipality holds over an immovable property, without any time-limit and regardless of who the registered owner is. It means that if you purchase a property which is subject to municipal debt at the time of transfer into your name, the municipality may in terms of this section execute against your newly owned property to recover the historical municipal debt, whether or not you incurred the debt.

This raises the question: why should a municipality be allowed to hold a new property owner responsible for the transgressions of the previous owner who refused to pay his / her municipal accounts on time, or at all?

The constitutionality of this provision in the Municipal Act was finally challenged in the matter of Jordaan v City of Tshwane Municipality.

In this matter, the Pretoria High Court ruled that this section in the Municipal Act is indeed unconstitutional and concluded that the security afforded to the municipality by section 118(3), will endure only for so long as the debtor (the person who incurred the historical municipal debt) owns the property.  The new owner of a property has no relation to the historical municipal debt and therefore section 118(3) unjustifiably limits the new owner’s property rights under the Constitution of South Africa.

Accordingly, the security afforded to a municipality by section 118(3) of the Municipal Act does not extend to the period after ownership has passed from the previous owner to the new owner and you as the new landowner may not be held liable for the historical debt on your new property.

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