We often get confronted by clients who are uncertain of what a Municipal Rates Clearance Certificate is, why it is needed and who is responsible to pay for it. This article addresses all these questions and is aimed at preparing clients for the commonly unforeseen expense accompanied by the obtaining of such a Certificate.
Defining Municipal Rates Clearance Certificate:
A Municipal Rates Clearance Certificate (the “certificate”) is issued by the Municipality which has jurisdiction over the immovable property, in which they certify that the Seller of the property does not owe any money in respect of their charges. A transfer of ownership can not be successfully registered in the Deeds Office without this certificate being lodged together with all other necessary transfer documentation (save for those exceptions prescribed by legislation).
How is it obtained?
An important step in a conveyancing process is when the conveyancing attorneys apply to the municipality for “rates clearance figures”. This application is normally filed by the conveyancing attorneys through an electronic Municipal system. The rates clearance figures ensure that the Municipality gets paid the amounts due to them before transfer of the property takes place. The average monthly costs of services delivered to the property over a period of 3 to 4 months, as well as any backlog on payments, is used to calculate this figure. The Seller of the property is then required to make payment of this amount to the Municipality which issue the conveyancing attorneys with the Certificate after receipt of payment. The Certificate is also issued electronically and will usually be valid for a period of 60 days after it has been issued. Should the registration of the transfer, for whatever reason, not be affected within the 60 day period, a new Certificate must be obtained and lodged at the Deeds Office.
Which party is responsible for paying for the Certificate?
As already described above, the Seller of the property is liable for payment of the “rates clearance figures” as calculated by the Municipality. The cost of application for the Certificate, however, is included as an expense in the Purchaser’s statement of account. The cost of the application for the Certificate is a fixed cost prescribed by each Municipality.
Time periods accompanied by the application:
Under normal circumstances it does not take longer than 10 – 14 days after date of application for the conveyancing attorneys to receive the requested figures. Once payment has been made the Municipality will usually issue the Certificate within a further 10-14 days. It must be noted however that these time frames may differ depending on the particular Municipality.
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