Johannesburg - Municipalities cannot hold new property owners responsible for the historic debt for municipal services of previous owners.
This groundbreaking ruling was made in the high court in Pretoria on Monday, and will have far-reaching consequences for millions of residential and business property owners, the property industry as well as municipalities themselves.
So said attorney Gary Ross, who explained that the judgment would not only save unknowing property buyers from being forced to pay former owners’ old debts to have services reconnected but would also force the municipalities themselves to start doing the work of collecting debt and not expect new owners to finance the debt.
On Monday, Judge Dawie Fourie declared the provisions of section 118(3) of the Local Government Municipal Systems Act, which provides for this, constitutionally invalid to the extent only that the security provision, “a charge upon the property”, survives transfer of ownership into the name of a new or subsequent owner who is not a debtor of the municipality, with regard to municipal debts incurred prior to such transfer.
“The Tshwane and Ekurhuleni metros were ordered to render municipal services where no debt exists in respect of municipal services between the municipalities and the new owners.
“The municipalities were restrained from claiming payment of outstanding amounts from new owners where they have no debt relationship with the municipality concerned in respect of municipal rates, taxes and charges,” Judge Fourie said.
Ross noted: “The practice by municipalities of holding new owners liable for the payment of historical debts of previous owners or tenants of previous owners was declared unlawful and invalid, and this is great news all round.”
In a shock move earlier this year, the Supreme Court of Appeal ruled that new property owners could be held liable for historic debts dating back 30 years.
Judge Fourie stated that he had ruled only on the legality of section 189 and not on the constitutional implications of the by-law. This finding was based on the court’s interpretation of section 118 as interpreted against South African common law.
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