MONEY CLINIC | I can't afford a new rates & levy certificate. Is there any leniency?

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A widow struggling to make ends meet, hit a snag when her rates and levies certificates expired during lockdown, while she was in the process of selling her property.

She writes:

My property was in the process of being sold. Rates and levies certificates expired during the lockdown. I had to pay more to get another levy certificate and the municipality is giving the conveyancer excuses about being short staffed and unable to attend to queries.

I am a widow, single mum and I am really hoping for this to go through as I am depending on the little money I get to get me through this difficult time. 

Is there no leniency granted with regards to these certificates expiring during the lockdown? I am worried as I have paid a lot of money to get my levies and rate certificates and just cannot afford to spend any more money on this. Your clarity and advice will be highly appreciated. 

Duane Marais, Attorney and owner of Duane Marais attorneys responds:

It is no secret that the extended lockdown has brought South Africa to a complete standstill and a beloved Fin24 reader shared their experience in this regard.

Duane Marais attorneys will touch on the applicable laws pertaining to the purpose, requirements and extension periods relating to obtaining Clearance Certificates from municipalities. Duane Marais Attorneys will then advise the Fin24 reader of their rights and certain options available to a seller of a property under the aforesaid circumstances.

Applicable Law relating to the issuing of Clearance Certificates

The local Government: Municipal Systems Act 32 OF 2000 (“MSA”) defines “property” as immovable property registered in the name of a personwhich includes sectional title units or a right registered against immovable property in the name of a person”.

In terms of section 118 of the MSA determines in relation to clearance certificates: “A registrar of deeds may not register the transfer of property except on production of a clearance certificate, issued by the municipality or municipalities in which that property is situated.” The clearance certificate “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.”

The aforesaid charges enjoy preference over any mortgage bond registered against the property. Certain properties are exempt from having to obtain a clearance certificate in order to transfer the property.

The Chief Registrar’s Circular No. 4 of 2018 deals with the extension periods of clearance certificates.

There are many different interpretations of the period of validity of clearance certificates, however, strictly speaking, clearance certificates are valid for a period of 60 days at a time from date of issue, excluding the day the clearance certificate was issued and including the last day (“expiry date”), except if the expiry date falls on a Sunday or public holiday, whereas the expiry date would then be the very next day after the Sunday or public holiday.   

Applicable Law relating to the determination of rates

The Local Government: Municipal Rates Act, 6 of 2004 (“MRA”) regulates the power of a municipality: to impose rates on property; exclude certain properties from rating in the national interest; make provision for municipalities to implement a transparent and fair system of exemptions, reductions and rebates through their rating policies; make provision for fair and equitable valuation methods of properties and to make provision for an objections and appeals process”.

The MRA stipulates that the council of a municipality must adopt a policy consistent with the MRA on the levying of rates on rateable property in the municipality. The policy must determine criteria to exempt “a specific category of owners of properties, or the owners of a specific category of properties, from payment of a rate on their properties”. The policy must further “identify and quantify in terms of cost to the municipality and any benefit to the local community- (i) exemptions, rebates and reductions; (ii) exclusions and (iii) rates on properties that must be phased in”.

A municipality may not levy a rate on: the first 30% of the market value of public service infrastructure; a nature reserve; a national park; a national botanical garden; a property belonging to a land reform beneficiary or his or her heirs, within 10 years from the date the property was registered in the office of the Registrar of Deeds; on the first R15 000 of the market value of a property assigned in the valuation roll or supplementary valuation roll of a municipality to a category determined by the municipality for residential properties or properties used primarily as a place of public worship by a religious community, including an official residence registered in the name of that community which is occupied by an office-bearer of that community. 

The MRA determines that: “A municipality may in terms of criteria set out in its rates policy exempt a specific category of owners of properties, or the owners of a specific category of properties, from payment of a rate levied on their property; or grant to a specific category of owners of properties, or to the owners of a specific category of properties, a rebate on or a reduction in the rates payable in respect of their properties". When granting exemptions, rebates or reductions in respect of owners of categories of properties, a municipality may determine categories of owners of properties that will qualify in accordance with the provisions specified in the MRA.

When granting exemptions, rebates or reductions in respect of categories of owners of properties, such categories may include: indigent owners; owners dependent on pensions or social grants for their livelihood; owners temporarily without income; owners of property situated within an area affected by a disaster within the meaning of the Disaster Management Act 2002 (Act No. 57 of 2002); or any other serious adverse social or economic conditions; owners of residential properties with a market value lower than an amount determined by the municipality; or owners of agricultural properties who are bona fide farmers.

In addition to the categories of rateable property for the purposes of granting exemptions, rebates and reductions, determine such property categories based on: properties used for public service purposes; and properties to which the provisions of the National Heritage Resources Act, 1999 (Act No. 25 of 1999), apply, or an institution that has been declared to be subject to the Cultural Institutions Act, 1998 (Act No. 119 of 1998).

'Blame it on the lockdown'

It is clear from the Fin24 reader’s experience that the reader is experiencing problems with either the conveyancer, the municipality or perhaps another stakeholder, not specifically mentioned herein. The Conveyancer is completely dependent on the Municipalities to obtain extended figures. Municipalities have been inordinately slow in implementing their safety protocols amidst the Covid-19 pandemic. In the case of Tshwane Metropolitan Municipality, they have only recommenced office work to their staff members on a rotation basis, since beginning of LL3.

This, together with the fact that personnel employed by the municipalities are not sufficiently trained on the implementation of a new electronic rates system (previously only physical applications were delivered and collected), the massive backlogs spanning from applications initiated prior to lockdown and the fact that municipalities do not want to allow agents access to their offices (under auspices always of Covid-19 safety regulations), makes the process of obtaining Clearance Certificates a tedious and lengthy process. The MRA provides municipalities with inherent powers to determine rates imposed on certain properties, to reduce rates imposed own certain owners and exempt owners of properties from paying rates, under the circumstances set out in the MRA. Accordingly, the MRA dictates that each municipality is responsible, through its rates policies, to determine extension periods relating to clearance certificates and the exemptions and/or reduction of rates applicable during lockdown, since all properties are currently subject to the Disaster Management Act and the Regulations promulgated thereunder. Theoretically speaking, the Deeds Offices, another stakeholder in the process, can also issue circulars in respect of extension of clearances. The Occupational Health and Safety guidelines implemented during Covid-19 and staff shortages are the dominant reasons provided for any form of delay in the processes of the Deeds Offices.In the matter between EY Stuart N.O. v City of Tshwane Metropolitan Municipality the Honourable Judge Mothle J, in the Pretoria High Court, demonstrated the court’s powers to grant an order that ensures that municipalities re-issue and re-deliver Clearance Certificates, if the Applicant’s rates are paid up to date. At present South African Courts may be approached after mediation and/or arbitration has taken place.

It is an inherent necessity for all stakeholders involved to be patient in what is turning out to be an economic crisis, at which people, property and the transfer of property ownership is at the epicentre of it all. One can take it up with the courts, but practically speaking, it will cause further delays in an already stretched process, which could possibly better be solved by agreement between all parties and by finding better solutions to our problems.“

Show up, do your best (within your capabilities) and take ownership (transparency, positive attitude and responsibility).” 

Questions may be edited for brevity and clarity.

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