Rates Clearance Certificate

11/03/2020 - By Tiffany Mare

What is a rates clearance certificate?

A rates clearance certificate is a document issued by the City Council in terms of Section 118 of the Municipal Ordinance. These amounts are due and payable prior to registration of the transfer.

Why is a rates clearance certificate necessary?

In terms of the Deeds Registries Act 47 of 1937 the Registrar of the Deeds Office cannot allow the transfer of a property from the Seller to the Purchaser to be registered unless the Conveyancer presents a valid Rates Clearance Certificate which has not expired, when lodging the documents in the Deeds Office. This ensures that all outstanding rates are paid on the property. In terms of the latest Constitutional Court case, the City Council cannot transfer old outstanding debt of the Seller to the Purchaser’s account.

How are the rates clearance figures calculated?

For the purpose of issuing the Rates Clearance Certificate, the City Council is in terms of Section 118 above, entitled to claim rates and taxes, electricity, water, sewerage and refuse for a period not more than two years prior to sale of the property up to and including 120 days in advance. Should the Seller owe monies to the City Council beyond the two-year period prior to sale, the City Council is entitled to recover these amounts separately from the Seller.

Who pays the rates clearance figures?

It is the Seller`s responsibility to pay all amounts required to obtain the Rates Clearance Certificate. The Seller must pay the conveyancer who will pay the City Council. The Purchaser only becomes liable for payment of rates and taxes to the City Council from date of registration of transfer, unless the Agreement of Sale states otherwise.

When does the Seller get a refund from the City Council and how?

The Conveyancer applies to the City Council for the rates refund. Once the transfer is registered the Purchaser is required to immediately open his own municipal account. No credit left on the Seller\\\'s municipal account will be refunded by the City Council to the Conveyancer unless the Purchaser has opened his own municipal account. The City Council takes approximately 3 to 4 months to reconcile their accounts and pay the refund. This payment is in the form of a cheque in favour of the Conveyancers Trust account. Once the cheque is cleared by the bank, payment is made to the Seller.