At STBB, we endeavour to keep our clients informed through regular matter updates and by explaining legal processes and intricacies. In the conveyancing context, obtaining and lodging a rates clearance certificate is central to a successful property transfer.
Under South African law, the transfer of immovable property cannot be formally registered in the Deeds Registry without a valid rates clearance certificate (‘RCC’). According to section 118 of the Municipal Systems Act, an RCC is a legal document issued by a local authority, which confirms that all municipal service fees, property rates, and other charges incurred during the 24 months prior to application have been fully paid.
To obtain an RCC, the seller’s conveyancer must apply to the relevant municipality for the issuing of rates clearance figures. The municipality will provide a breakdown of the amounts to be paid for a period of 90 to 120 days in advance to prevent any outstanding payments on transfer.
The conveyancer collects the money from the seller to pay the municipality, which will then credit the seller’s account. Notably, the seller may discontinue paying monthly rates for the period included in the assessment.
Once payment has been received and the municipality has verified all supporting documentation, it will issue an RCC, which is valid for 60 days, and must be lodged with the transfer documents in the relevant Deeds Registry.
Following the registration of transfer, the Deeds Registry will update its records to reflect the change of ownership. Once this is finalised, it will notify the relevant municipality, which will update its own records and open a new account in the name of the purchaser. From the date of registration, any amounts due are backdated and incorrect charges levied against the seller’s account – in respect of the sold property – are reversed.
Once the seller’s account has been closed and the requisite adjustments are made, any refund owed to the seller is generally paid to the conveyancer. While the conveyancer is not responsible for calculating the rates refund, the municipality will process the refund to the conveyancer, who will then pay the seller upon receipt.
Depending on the municipality, the process for obtaining a rates refund can be unpredictable. Sometimes, it proceeds smoothly. In rare instances, application to court is required to compel payment. In our experience, diligently following up with the municipality may expedite the process.
For practical purposes, STBB supplies sellers with a rates refund form for signature, alongside their transfer documentation, prior to lodgement in order to streamline the process and minimise delays.
For professional legal assistance in all property law and conveyancing matters, contact us at info@stbb.co.za.
