Real Estate Investor Magazine South Africa August 2013 | Page 37

RESIDENTIAL
transfer of ownership of property until debts have
been paid (Section 118(1)). The two sub-sections
thus provide the municipality with two different
remedies. Section 118(1) is an embargo provision
whilst Section 118(3) is a security provision.
What is especially important in relation to
our query, is that whilst there is a time limit
specified under Section 118(1), Section 118(3) is
an “independent, self-contained provision”. The
security provided by sub-section (3) amounts
to lien having the effect of a tacit statutory
hypothec and no limit is placed on its duration.
As stated by the court, “Its effect is to create in
favour of a municipality a security for payment
of the prescribed municipal debts so that a
municipality enjoys preference over a registered
mortgage bond on the proceeds of the property”.
In the circumstances, it does not matter when the
component parts of the secured debt became due.
Whilst the municipality lost the appeal
for technical reasons, the wording of the
judgment has lead to some confusion and much
debate. Unfortunately, the judgment stops
short of providing a fuller explanation of the
practical implications of its determination and
clarifying what debt municipalities can charge
and to whom within the framework of the
conveyancing process.

ultimately does a clearance certificate guarantee?
Who remains liable for historical debt? Who can the
municipality hold liable for the historical debt? The
question of the validity of the clearance certificate
has significant consequences and has created great
concern amongst conveyancers.

Who is liable for historical debt?
As stated in the aforesaid judgment, a municipality
has two separate remedies. Should a municipality
seek to enforce its rights and sue an owner for arrears,
in terms of Section 118(3), a municipality is entitled
to claim for full arrears, including historical debt. In
terms of other Court decisions read together with
by-laws (which may differ per area) owners are jointly
and severally liable for the consumption charges
of occupiers of property, should same not be the
owners. It is important to note that a municipality
enjoys preference over any mortgage bond registered
against the property. In the circumstances, if a
property was sold in execution by a bank, the
municipality would be paid first.
In circumstances where an owner seeks F?6V???&?W'G??B&WVW7G26?V&?6R6W'F?f?6FR?F?V??6V7F???????W2?F?R6?W'B6??f?&?2?BF?P??V??6??G?6??6VFW2F?B??v?W"?2V?F?F?VBF??6V7F??????6?V&?6R6W'F?f?6FR??6????6R?`?F?R&WV?&V?V?G2?6??gW6???6??V??6??G????BW&6?6W"?&?P?f?"??7F?&?6?FV'B?b&Wf??W2?v?W#???F??2?VFv?V?B?2&?6VB???VW7F???2&Vv&F??p?F?Rf?F?G??b6?V&?6R6W'F?f?6FR?v?@???b6V7F??????6?V&?6R6W'F?f?6FR???6?fW'0?FV'B??7W'&VBGv??V'2&V6VF??rF?R?6F???????'F??v??F???4T??&V?G6??V?@??&V6W6R?bF?RW7FFRvV?N( ?2F???BF?F?V?"?? ?&?W&??F?W?&RW??6??rF?R??F??&BF?'V?W2?`?6??7V?W"&?FV7F???7B?5??v??6?6?&W7V?B???&?rf??W2f?"F?R??F??&B?b??F??&G2F???Bv?F?&?Vv??W7FFRvV?B???v?V?BGf?6RF?V?F???R7W&RF?W?F?F?V? ????Wv?&?F??&?Vv????FW&?2?bv??F?W??W@?F?&?Vv?F?V?"F??"2FV??B?F??( ?B?W7BF?7&VF?@?6?V6?>( 2F?&VfW&V?6R6?V6?2???R7W&RF?R?FV?F???FV??B?27F&?RBv?&??BF?BF?V?"&Wf??W0???F??&Bv2??v?F?F?V?"??V?B??7F?'??F?P?6???V?vR?2F?B???6R??R?WBFV??BF?&?Vv?F?P?F??"?F?W??fR&?v?G2v??6?6??WF??W2W?6VV@?F??6R?bF?R??F??&B??B?2f?"F??2&V6??F?BF?P?fWGF??r&?6W72?27&?F?6???v?B?2F?R??7BW76V?F???V6R?bGf?6R??P?6?v?fRF???F??&C???v?V?BGf?6R??F??&G2F?B??bF?W?v?&???rF?&?Vv???W7FFRvV?B?F?6V?V7BF?BvV?BfW'?6&VgV?????wwr?&V??r?6?????"?v?B?2F?R&?vvW7B&?&?V?f6??r??F??&G0?&?v?B??s???bF?R&V?F???6??v?F?FV??BGW&?26?W"??bF?P???F??&B?2??B&?FV7FVB?F?W2??B?fRF?R&?v?@??6??V??6??G????BF?R?Wr?v?W"&W7??6?&?P?f?"??7F?&?6?FV'B??7W'&VB'?&Wf??W2?v?W#??F?RFV&FR&?6W22&W7V?B?bF?Rf7BF?@??6V7F????7FFW2F?BF?RFV'BGF6?W2F?F?P?&?W'G??B??BF?F?R?v?W"?"F?F?R7&VF? ??bF?RFV'B?V?f?'GV?FV??F?R?F?&F?P??VFv?V?B?27&VFVB?V6?6??gW6???????7vW&??rF??2VW7F?????b??RvW&RF?6??V??W???RF?R?VFv?V?BF?vWF?W"v?F?F?P?&?f?6???2?b6V7F?????Bv?V?BV"F?B??V??6??G?6?V?B&?6VVBv??7B?Wr?v?W ???F?W6R6?&7V?7F?6W2??vWfW"???????????V??W72g&VBv0?6???GFVB'?F?R'F?W2F?F?R6?R?F??26???@?&RF?R66R?F?R6??7F?GWF????6?W'BFV6?6????F?R?GFW"?b???Gv?g2?V?6????FV???WG&???F??V??6??G??B?F?W'2?F?P?6?W'B?BF?FWFW&??RF?R6??7F?GWF?????f?F?G??bf&??W2&?f?6???2???6?VF??r6V7F??????F?R6?W'Bf?7W6VB??F?R???&WGvVV??F?RFV'B?F?R?v?W"?BF?R&?W'G??F?P?6?W'BV?F??FV?'V?VBF?B6V7F????v0?6??7F?GWF?????f?B???vWfW"????G2f??F??w2??@?&WV?&VB7Vff?6?V?B&????G?&WGvVV?F?RF?&VR??????????G&?6fW"F??Wr'G??'&V?2F?B?W?W2?F?W&R?2?6??V?F?W"?6??G&7GV??W?W2??"V?&?6??V?B??F?R'@??bW&6?6W"?$U4?U$4U0??'F?b?f?GFP??7?7FV?2???6R??Rv???&RW??6VBG&?F?6???F?P???F??&B?2F?V?7W&RF?B?R?2&7F?6?7?7FV?0????6RF?Bv?fW&???2&V?F???6??v?F?F?RFV??B??W7V6????b?RF?W2??Bv?F?&?Vv??W7FFRvV?B??2?v?BF???RF????F?R6V7&WBF?v??BFV??B????F??&B&V?F???6???3??F?R6V7&WBF?v??BFV??B???F??&B&V?F???6???2??v?F??WBVW7F????6???V??6F????F?R??F??&B?0?6??WF??W2f?WvVB2F?RV?V??'WB?b?RV?'&6W0?F?RFV??B??Bf?6RfW'6?F?&?Vv?6???V??6F?????F?V?"&V?F???6???2??V?F?&R?6?F?fR??R??B?v?B?2F?R??RF???rF?RFV??B?&?WB?VVG0?F?R??7C???W&?FW?6?B??VgG?FW?6?B6??gFV?7B2?FWFW'&V?BF??FV?F??FV??B?B6?6??WF??W0?F?R&?W'G?F?BF?RFV??B6?V?B?fRff?&FV@?V?F?&V??WB?bF?V?"&?6R&?vR?VwW7B#24&V?W7FFR??fW7F? ??3P???