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Wednesday Aug 05, 2015

Lawyers decry Joburg's rates arrears plan

The City of Joburg's new plans to crack down on defaulting ratepayers have ruffled the feathers of Joburg Attorneys Association (JAA) lawyers, who feel they are being reduced to debt collectors.

Conveyancing lawyers are now expected to collect all arrears before being issued with clearance certificates for properties being sold despite section 118 (3) of the Local Government Municipal Systems Act stipulating the city can demand only two years of arrears.

The city is prohibited to withhold such a certificate if arrears over the two-year mark aren't paid.

Anton Theron of the JAA said: "The city should be pursuing its debt on a regular basis, not just at the time of sale. It can't expect us to become its debt collectors. We cannot demand outstanding arrears from our clients. This can only be done through an urgent court order or on the instruction clients."

Along with the Pretoria Attorneys Association, the Gauteng Law Council and the Law Society of South Africa, the JAA was liaising with the city about this issue after city-appointed attorneys sent them instructions to ensure arrear payments for rates and services were made before transfers were done.

Spokesman for the city's group finance cluster, Stanley Maphologela, said the city was owed millions of rand in outstanding taxes and rates by customers who "disappear under the radar" after having sold their properties.

"To avoid future disputes, we advise estate agents and transferring attorneys to educate prospective buyers to amend their offers-to-purchase to state the seller shall pay all historic debts to the municipality before, or on registration of the transfer," said Maphologela. There was a false belief that the issue of a clearance certificate was confirmation that all debts had been fully paid by the seller, he said.

"Only the debts for the preceding two years are certified as having been paid, leaving the remaining historic debt still a target for debt recovery," said Maphologela.

He said the city would be contacting attorneys advising them of the outstanding amounts on properties sold and "if payment is not made in full, the city will apply to the high court for immediate relief ", he said.

But obtaining urgent court orders to stop sales would be difficult and costly, said attorney Chantelle Gladwin.

"It is not certain the city would be entitled to this relief on an urgent basis. It could argue it is entitled to it urgently because after transfer it loses its right of security over the property, but this must be weighed against the principle that self-created urgency is not enough to justify the burden on the court's time and the disadvantage this causes other litigants in line," she said.

If the courts granted the city urgent attachment orders, this would send the message that it was acceptable to shirk the burden of collecting debt until the last minute and reinforce the idea that the city could ignore its debt-collecting obligations at all times other than at the sale of a property, she said.

Gladwin believes about 10 000 properties are transferred monthly. If only 20 percent have arrears, this means the city would need to make 2 000 urgent applications to the high court in Joburg a month.

The Star


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