Tag Archives: municipal debt

Should property buyers be responsible for municipal debt they didn’t even incur?

As you may have heard, a small bombshell has hit the property market. Simply put: the Supreme Court of Appeal has ruled that the current owner of a property can be held liable for all unpaid rates, taxes and utilities incurred on the property over the preceding 30 years.

Here’s the low-down on this court decision:

In 2013 Mr Mitchell bought a property at an auction. When he contacted the municipality he was told that the outstanding municipal fees and taxes came to a little over R230k. This was the total amount outstanding, including debts older than two years. After some negotiation the municipality agreed to issue a clearance certificate if Mr Mitchell paid the amount incurred over the preceding two-year period, totaling a little over R126k. Mr Mitchell paid this amount, and as far as he was concerned, this matter was now settled. In due course the property was transferred to Mr Mitchell.