Advice and Opinion

Comment: The impact on risk of ownership – Jawitz Properties

The latest ruling by the Supreme Court of Appeal relating to rates and taxes on a property is most concerning for property buyers and could have lasting implications regarding the risk of ownership.

The ruling states that the current owner can be held responsible for any arrears in rates, taxes and other utilities incurred by, not only the previous owner but also any past owner for debts incurred going back 30 years

“This could be extremely problematic for buyers and home owners who may have to, either take a risk, or get the previous owners to guarantee that any further obligations relating to the property will be borne by them. In future, the difficulty will arise when sellers and especially buyers are confronted with Rates Clearance Certificate, and will have to assume that the content confirms that the account up to date and paid in full – as opposed to a lien on a property which can be sourced from a title search,” says Herschel Jawitz, CEO of Jawitz Properties.

“The current ruling creates an element of uncertainty and potentially impacts on risk of ownership should there be any unexpected occurrence in the future. When the Council issues a Rates Clearance Certificate, there should be some assurance that a seller and buyer can expect the account to be clear – and not ‘clear unless we find something more’.

“In addition, the City Council’s systems and processes are far from perfect and in cities like Johannesburg, home owners continue to receive incorrect bills for rates and utilities,” he says.