Can the Municipality demand future payments before issuing a rates clearance certificate?

A recent High Court decision has left everyone believing they cannot, but the judgement is being misinterpreted. The Deeds Registries Act provides that a rates clearance certificate issued by the local authority and valid as at the date of registration of the transfer must be lodged with the other documents for the registration of a transfer.

A Rates Clearance Certificate must by law be valid for at least 60 days from the date of issue. Most municipalities will include a future pre-estimate of rates and municipal consumption for 90 to 120 days and not just the 60 days. The Seller must pay this, as it is the financial responsibility of the current owner at the time, and any credit in the Seller’s municipal accounts after the registration should be refunded to the Seller by the municipality.

The answer is “YES” – the municipality can, and is in fact obliged by law to, demand future payments. Just not future payments for the whole financial year of the municipality which is what the Court found in the case referred to above.

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