Judgements favour property owners over municipalities

14 September 2017

Property owners are riding a wave of success following a number of court victories against the country's municipalities, the most recent being last week's landmark judgement on historical debt.

Owner associations and legal experts have welcomed the court rulings, saying property owners finally have their rights established, and some are now even enshrined in the country's constitution.

In three recent cases it was ruled that:

New property owners cannot be held liable for historic municipal debts incurred by previous owners.

Property owners do not have to pay rates on properties for full financial years if they did not own the property for the full year.

Municipalities cannot charge property owners for an unlimited number of years' outstanding water readings that they are unaware of.

Speaking about last week's Constitutional Court ruling that new property owners cannot be held liable for historic municipal debts incurred by previous owners, Neil Gopal, chief executive of the South African Property Owners Association (Sapoa) says it is "possibly the best news" for homeowners and those looking to invest.

"The municipality can no longer simply lump a bad debt on an unwilling, uninvolved party and force him to pay a predecessor's debt.

"The damage the old law caused is immeasurable because we'll probably never know how many buyers decided not to buy because by doing so they might have automatically become liable for someone else's debt."

Gopal says this threat has been "taken off the table" and historical debt will attach to the person who incurred it, not the property.

"Property rights for all citizens are fundamental to a well-functioning economy, and Sapoa welcomes this ruling."

In March this year, municipalities charging property rates for full financial years before issuing owners with clearance certificates in order to sell, were dealt a blow by the Supreme Court of Appeal.

It ruled that property owners did not have to pay rates on properties for full financial years if they had not owned the property for the full year.

Simphiwe Shozi, a senior associate at Shepstone and Wylie's property and conveyancing department, says this case signified "a great victory" for property owners because they can never again be required to pay a full year's rates in advance when they sell their properties. of, but that municipalities also have the responsibility to take reasonable steps to quantify the amount due to them.

This ruling came after a property owner was billed the difference between his actual water consumption and the estimated consumption.

Although the owner had paid the estimated consumption each month, the municipality had not taken a water reading for six years.

When it eventually performed a meter reading, the difference was an amount in excess of R1 million.

The owner raised a dispute regarding the charges for usage that had occurred more than three years before the actual meter reading was taken based on the Prescription Act.

"The municipality argued that the obligation to pay had not prescribed and that prescription only started running the moment that (the owner) was billed with the real consumption," Fourie Fismer Incorporated attorneys said in a statement.

"It also argued that (the property owner), in regularly paying its municipal account, acknowledged the debt, interrupting the prescription period."

However, the court ruled against the municipality, saying it was not entitled to claim charges for the period longer than three years.

Commenting on the rulings, Kai Howie of MDW Attorneys says: "For many years consumers had to bear the brunt of sloppy administration executed by municipal officials.

"Fortunately for ratepayers, the courts have been willing to set egregious and illegal municipal revenue collection schemes aside, and where it appears that a municipality is abusing its revenue collection powers, ratepayers would do well to get legal advice on whether such a policy can be challenged."

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