Advice and Opinion

Electronic rates clearance certificates will be rejected

Lanice Steward, managing director of Knight Frank Residential SA, has drawn attention to a recent newsletter from Smith Tabata Buchanan Boyes, which mentions that the system of generating electronic rates clearance certificates has been deemed problematic by the Chief Registrar, in that the validity of the certificates from a legal point of view is questioned.

A seller should be able to furnish his agent with a copy of the rates bill from the City, showing that the rates are fully paid. The agent must also inform the seller that they will also have to pay up to four months rates in advance, at the time of the sale, said Steward.

“A good agent or attorney will advise the seller on the sale of the property to immediately go to the City Council to pay all of the rates due and the three to four months’ amount, as this is required by the City to issue the clearance certificate.”

This will not eliminate the problem of the Chief Registrar not accepting electronic clearance certificates, but should ensure that there is no delay in the transfer taking place, she said.

“Twenty to twenty four months ago the City put a great deal of money into putting this electronic system into place and it is unfortunate that this was not done in consultation with the Chief Registrar.

It is very important that this problem is sorted out before the 28th February – which is the date when the Chief Registrar has said they will stop accepting electronic rates clearance certificates – as the implication of the non-acceptance is huge: the delayed transfers will have a knock-on effect on all concerned, particularly if the proceeds from part of the sale is meant to go towards the price of the next purchase, said Steward.

The delays effect the buyer wanting to move in, who may have to vacate his premises by a certain date, whether rented or owned, and this then affects those people concerned as well, she said.

One particular example is a recent case where a buyer has been waiting to move into his new home, and the transfer has been delayed, but he has already given notice to his landlord. There is no revoking or changing the vacation of the rented property because a new tenant has been found. This buyer now has to pay for temporary accommodation (short term leases are inevitable more expensive) and storage of all his furniture while he waits for transfer to take place.

“This is another very important reason when completing an agreement of sale, that unless it is vacant land, that occupation not be given on transfer but on a specific date and the occupational interest amount be agreed to at the time of the purchase,” said Steward.

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