Rates Clearance Certificate
We make sure that you get your money from the City of Johannesburg
Rates Clearance Certificate
We collect the money due to you by the City of Johannesburg
Ensure your property transactions are smooth and hassle-free with our expert assistance in obtaining a Rates Clearance Certificate. A mandatory document for all property sales, this certificate verifies that all municipal rates, taxes, and utility charges are correctly calculated and paid, clearing the path for legal property transfer.
Our team specializes in navigating the complexities of municipal compliance, ensuring a seamless application process. We handle every detail—from calculating outstanding amounts to liaising with Council—saving you time and stress.
Whether you’re selling a home or a commercial property, trust us to deliver prompt and reliable service. With our expertise, you can avoid delays, disputes, and legal complications, ensuring your transaction moves forward without a hitch.
Secure your Rates Clearance Certificate with ease and confidence. Contact us today for a professional and efficient solution tailored to your needs. Your peace of mind is our priority!
Questions and answers
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1. Assist attorneys to register as an attorney to deal with the City of Johannesburg
2. Assist in obtaining clearance figures and certificates
3. Obtain Section 118 clearance figures
4. Do audits for Section 118 clearance figures
5. Assist in the resolution of queries with respect of clearance figures.
What is a rates clearance certificate?
A rates clearance certificate is a certificate issued by the Municipality confirming that all the Council debits for the last 2 years and 4 months in advance, were paid in terms of the Law and transfer may be registered before a certain date.
Why do I need a rates clearance certificate?
In terms of the Deeds Office regulation, no Deed of Transfer may be registered without a valid Rates clearance certificate.
Who is responsible for obtaining a rates clearance certificate?
The transferring attorney must apply for a clearance certificate. He also, normally, pays the monies due which he collects from the Seller to Council as he must make sure that no fraud was involved in obtaining the rates clearance figures or payment of the rates clearance certificate.
How long is a rates clearance certificate valid?
When clearance figures are applied for, it must be paid within 6 weeks. An exact date is printed on the clearance figures. Clearance figures are issued for 4 months.
Can I sell my property without a rates clearance certificate?
No.
What information is included in a rates clearance certificate?
To obtain clearance figures, the Council needs the following documents:
1. Completed rates clearance application.
2. Copy of the deed of sale.
3. Power of attorney from the Seller that the attorney may act on his behalf to obtain a clearance certificate.
4. FICA documents of the Seller
5. FICA documents of the Purchaser
6. Copy of the Council accounts of the property
7. Copy of the Deeds Office printout, especially in the case of Sectional Title units.
8. In the case of estate transfers, a copy o the Letter of Executorship and the L & D Account.
How much does a rates clearance certificate cost?
The amount to be paid depends on the current amounts due on al the Council accounts of the property. We deal with Section 118 hereunder. Provision is made for debits of 4 months in advance.
Are there any additional fees associated with obtaining a rates clearance certificate?
There is a nominal fee payable for the application apart from the monies currently due plus the provision for the advance debits.
Do I need to pay my outstanding municipal rates before applying for the certificate?
You may pay your outstanding municipal fees before you apply for a rates clearance certificate. If Section 118 is applicable, the outstanding amount must not be paid as it will mean that the benefit of Section 118 will be lost. The effect will simply mean that the amount currently due will be less. The Seller must then also make sure that the current amount due is not included in the clearance figures.
What happens if I cannot pay the outstanding rates?
If you cannot pay the rates clearance figures, the following rules will apply
1. If you do not have the cash on hand, but there is enough money available in the sale of the property, you may borrow money or request the transferring attorney for bridging finance to settle the rates clearance certificate.
2. If there is not enough money to settle the clearance figures and the outstanding bond, you may request the bondholder and the agent to consent to limit his settlement to the balance of the proceeds of the sale, after the other liabilities are settled.
3. It may be important to consider the application of Section 118.
How long does it take to process a rates clearance certificate?
The Council issue clearance figures to the transferring attorney within 3 to 5 days. After payment, the certificate is mailed to the attorney within 3 days.
What happens if the water and/or electricity are billed on a tenant account? Is the Seller liable for payment of these accounts?
Yes. The Council may not issue a rates clearance certificate if all the debts are not paid up to date with 4 months in advance. Even if the Council bills under a tenant account, these debts must still be paid.
Can I apply for a rates clearance certificate online?
The transferring attorney may register to apply for rates clearance figures on lie. The figures will by mailed to the transferring attorney. After payment, the certificate will also be sent via email.
Do sectional title properties require a rates clearance certificate?
Yes. Sectional title properties pay Assessment Rates and refuse. Their debts must be settled prior to transfer.
What happens if there are disputes over municipal rates or taxes?
If there are disputes over debits, then
1. the amount due per the clearance figures must be settled under protest to enable the transfer of the property to be registered. After the transfer of the property, a rectification journal can be registered.
2. The Seller can approach the Court to compel the Council to correct the account or issue a rates clearance certificate.
3. The Seller can stop the transfer of the property pending finalization of the query.
Can a rates clearance certificate be revoked?
Yes. If the Council realises that there is an error, or fraud, in the issuing of the figures of the issuing of the clearance figures, the Council may revoke the certificate prior to registration of transfer.
What happens if there are errors in the rates clearance certificate?
If there are errors on the rates clearance figures or certificate, the transferring attorney must point it out to the Council to correct it.
Can a rates clearance figures or the certificate be extended?
Yes. If the period for which figures were requested does not lapse, the figures must be canceled first before extended clearance figures can be applied for.
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What happens if the rates clearance certificate expires before the property transfer is completed?
If the period, for which figures were issued expired, fresh figures must be applied for, and paid, to get a new clearance figures.
How often should rates clearance certificates be updated for ongoing transactions?
When the transferring attorney notice that a rates clearance certificate will lapse before registration of transfer will happen, he must request fresh clearance figures and pay it.
What reasons may cause the Council to refuse to issue clearance figures and what must be done about the issues:
1. Water, electricity, sewer, rates or refuse not linked to the account. Link services and request billing thereof.
2. Water and electricity billing on estimates. Determine if the meters are working. If it is in order, load actual readings. If not, arrange a replacement and, after a use profile is obtained, bill on daily average.
3. Engineering fees outstanding. Liaise with Engineering Section to advise Rates Clearance Section that engineering fees are settled.
4. Subdivision or consolidation not on LIS. Liaise with LIS, Rates Billing and Billing to correct billing.
What happens with the monies paid to Council for four months in advance and the transfer is registered before the four months expire?
After registration of transfer, Council close their accounts on date of registration of transfer. The balance which remains in the account. The transferring attorney must request payment of these monies to their trust account as a refund. We deal with refunds separately.
Section 118 of the Municipal Systems Act
What is Section 118 of the Municipal Systems Act?
In terms of Section 118 of the Municipal System Act, the seller is liable for the debits on the accounts for the last 2 years. If the amount due on the current invoice is higher than the debits for the 2 previous years, then the true calculation is as follows:
1. Take the current balance on the account.
2. Deduct the balance for 2 years ago.
3. Add the payments for the last 2 years.
4. Re-calculate the interest as the interest debited on the amount older than 2 years must not be calculated.
5. If there was a re-bill during the last 2 years, the true balance of 2 years ago must be calculated.
What happens when clearance figures are paid in terms of Section 118
1. The Municipality is paid the figures for which they must issue a rates clearance certificate.
2. A valid clearance certificate is issued by the Municipalioty.
3. The Seller does not pay the amounts due which may be due in excess of the Section 118 figures. The Council may attempt to recover the balance due but they have the following problems:
– The amount due for the last 2 years plus 4 months are paid.
– The debt older than 3 years may be prescribed. 8 months may be due.
– There may be a dispute about readings and billing.
– The risk is that, after transfer, the chance of recovery by Council is slim.
The Council, therefore, tend not to persue the recovery of these outstanding amounts.
4. The Purchaser get the property with a clear slate and the Council may not recover any amounts due by the Seller from the Purchaser.
What is the process to obtain a clearance certificate in terms of Section 118?
A normal application is lodged with the Council. A covering email may be issued to request clearance figures in terms of Section 118. When the figures are issued, there is a section dealing with the total amount due and the amount due in terms of Section 118. If Section 118 is applicable (the Section 118 amount is lower than the total amount due), it is adviseable to do a proper audit to ensure that the amount due is correctly calculated.
What happens if a Seller disputes the outstanding amounts under Section 118?
If the Seller dispute the calculation of figures in terms of Section 118, the best will be to liaise with professionals to advise him and liaise with Council to correct the account.
Does Section 118 apply to deceased estates or inherited properties?
Yes
How does Section 118 affect properties in insolvency or liquidation?
Section 118 applies to insolvent estate and liquidation transfers.
Are new property owners responsible for historical municipal debts under Section 118?
No.
Does Section 118 apply to auctioned properties?
Yes. Often the sale agreement of an auction sale stipulates that the Purchaser is liable to obtain a rates clearance certificate and that all arrear Council costs must be paid. In that case, he can not only pay the Section 118 clearance figures but must pay the full amount due.