The importance of getting professional advice when you buy or sell immovable property

BY TRACEY WATSON-GILL - APRIL 22, 2016

A recent Supreme Court of Appeal judgement has once again highlighted the importance of getting professional advice when you buy or sell immovable property.

The facts were more or less as follows:

•   A property was sold in execution, and the buyer paid all municipal debts for the preceding two years (in order to obtain a municipal clearance certificate, which you need to take transfer), thinking that that was the end of the matter.

•   The new owner on-sold the property to another buyer, who was refused municipal services until she paid a "historical debt" (over two years old and therefore not part of the clearance certificate) of R106,219-75.

•   The no-doubt horrified new buyer understandably declined to either pay a cent to the municipality or to take transfer until a court ruled on whether it is correct that the historical debt remained a charge against the property.

•   Initially, the High Court found in her favour that old municipal debt cannot survive a sale in execution. The SCA disagreed, holding that - per existing legislation and regardless of whether the sale was an execution sale or a normal private sale - the municipality's claims for rates, taxes and services remained "a charge on the property". These old debts survived the change in ownership. Provided that it followed its own bye-laws (in this case requiring it to first try recover from the original debtor, and disallowing action against an occupied property), the municipality could obtain court authority to "perfect its security" and sell the property.

There is talk of a constitutional challenge to this legislation, but in the meantime it is vital to take legal advice BEFORE you sign an offer to purchase. A simple clause in the offer to purchase in the matter under discussion, to the effect that the seller must settle any historical municipal debts dating back more than two years, prior to registration of transfer, would have protected this buyer against a nasty shock.

Sellers - ensure a quick, clean transfer - ask your attorney (and remember as the seller, it is your right to choose the conveyancer) to double-check that the municipality is not going to hassle you down the line for some old "forgotten" claim. It is likewise vital that if your transfer is registered after 30 June, the rates for the new rates year are collected in full from the buyer, as you will remain liable for those rates until the end of the year of registration.

The conveyancing department at Goldberg & de Villiers Inc, headed by Adri Ludorf and Tracey Watson-Gill, assisted by Nicholas Mitchell and nine highly qualified paralegals, will gladly assist with any of your property law related needs.

It will be our pleasure to do your business!