One of the most important aspects of buying or selling a property is obtaining a Rates Clearance Certificate. To sell your property in South Africa, you are required by the law to get Rates Clearance from the municipality. As the seller, you are responsible for ensuring that the rates and services fees are up to date and that you’ve set up a municipal account before selling the property. Similar case applies when a tenant has a leased a property.
What’s a Rates Clearance Certificate?
A Rates Clearance Certificate is a document that certifies that the seller of a property doesn’t owe any money to the city or municipal council. This implies that when the buyer becomes the new owner of the property, no money will be owed by the seller of the property.
The Registrar of Deeds will not transfer a property from a seller to a buyer until the conveyancer presents the Rates Clearance Certificate when lodging the property documents are in the Deeds office. So, by issuing the Rates Clearance Certificate, the Registrar of Deeds makes certain that the new property owner isn’t responsible for the outstanding balance that the seller owes the city or municipal accounts.
After registration, the municipal council refunds the seller the amount that was paid in advance. It’s important to note that it’s not the responsibility of the transferring attorney to get the refund back to the seller, but the seller’s ultimate responsibility to follow up.
Why Do You Need It?
Without a clearance certificate, the transfer of ownership of a property will be rejected by the Registrar of Deeds and may prolong the change of ownership. What’s even worse is the fact that obtaining Rates Clearance Certificates takes close to a month and has been problematic in the past few years due to the financial end year billing issues and other problems in municipality offices across South Africa.
Since most property sale agreements stipulate that occupation of the sold property takes place on transfer, any delay with the Rates Clearance Certificate can have detrimental consequences: it becomes exceptionally hard for buyers and sellers to plan and coordinate their moves effectively. Furthermore, additional charges may be incurred where temporary accommodation is to be arranged and furniture and other household items need to be placed in storage facilities, or even worse, having to pack, unpack then pack them again.
Remember that the municipal council in South Africa processes about 10 000 Rates Clearance Certificates in a month and it takes up to 30 days from the day they receive your application to clear your property. To ensure that everything moves along quickly, it is important to resolve account issues and any other account arrears before you apply for processing of the clearance certificate.