Am I really responsible for the municipal debts of a previous owner?

Constitutionality of Section 118 of the Municipal Systems Act
Am I really responsible for the municipal debts of a previous owner?

 

The question that was on everyone’s lips whilst uncertainty roamed as our courts have not had the opportunity to test the constitutionality of Section 118 of the Municipal Systems Act (MSA). Well that time has come and the Constitutional Court has spoken.

The Constitutional Court recently handed down judgement in Jordaan and Others v City of Tshwane Metropolitan Municipality and Others, and declared that a new owner is not liable for the previous owner’s debts arising before transfer of the property.

Section 118(3) has been the cause of a lot of concern for home owners as this section is viewed as enabling a municipality to hold a new home owner responsible for the arrear municipal debts of a previous owner. According to this section, an amount due for municipal fees is a charge upon the property and enjoys preference over any mortgage bond registered against the property, thereby creating a security provision in favor of the municipality for the payment of the outstanding debts. No time limit is attached to this provision and it does not matter when the secured debt became due. The Court held that section 118(3) does not require public formalisation (e.g. registration in the Deeds Registry) and this is required to give notice of its creation to the world. The Bill of Rights prohibits arbitrary deprivation of property, which would happen if debts without historical limit are imposed on a new owner. Therefore, to avoid unjustified arbitrariness in violation of section 25(1) of the Bill of Rights, section 118(3) of the Municipal Systems Act must be interpreted so that the charge it imposes does not survive transfer to a new owner.

According to the Constitutional Court, section 118(3) is not unconstitutional and is well capable of being interpreted so that the charge does not survive transfer to the new owner and it declared that, upon transfer of a property, a new owner is not liable for debts arising before transfer from the charge upon the property under section 118(3) of the Local Government: Municipal Systems Act 32 of 2000.

Jordaan and Others v City of Tshwane Metropolitan Municipality and Others

Author: Natalie Steenkamp, Associate, Phatshoane Henney Attorneys

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