Tshwane denies clearance certificate problems

PRETORIA - The City of Tshwane has denied that there are problems with the issuing of municipal clearance certificates within the council. In April the Democratic Alliance submitted a set of questions to the council after receiving a flurry of public complaints about the calculation of service bills and the subsequent delay in the issuing of clearance certificates to deeds attorneys.

DA Councillor Adriana Randall who submitted the questions says she is highly dissatisfied with the answers she received. They were provided by way of fax without the author being identified. The document (which is in REW's possession) seems to have been hastily and carelessly put together. The author is also evasive about answering questions pertaining to claims that the municipality is not properly collecting debts and therefore is allowing arrears to accumulate where properties are rented to tenants. Owners are eventually held responsible for those arrears and when they dispute these figures there are lengthy delays in the issuing of clearance certificates for property transfer.

Randall says she will pursue the matter further until the council provides adequate answers to its questions.

The following is an unedited extract from the Q&A document:

Q: How many clearance certificates are currently not issued due to arrears municipal services accounts payable to the Metro Council? Please provide a list of applications not finalized yet.

A: Clearance certificates are issued immediately upon receipts of required payment, therefore there is no clearance certificates that have not been finalised yet. The Court ruling regarding the City of Cape Town vs Real People Housing (Pty) Ltd the City of Tshwane has implemented the court order in 2009 whereby the Transferring Attorneys are requested to pay two years arrears preceding the date of application for clearance certificate. However the property owner is requested to sign debt acknowledgement contract for the remaining arrears before clearance certificate is issued.

Q: Please provide proof in the cases listed in question 1 (above) - the Metro Council did everything in their power to prevent consumption charges to escalate?

A: It is mentioned in question 1 that no clearance certificates have not finalized yet therefore no assurance should given that consumption charges will be prevented from escalating.

Q: Does the Metro Council have any discretion to grant or withhold clearance certificates? If not - please explain why this practice is followed to withhold clearance certificates from owners?

A: The City does not have any discretion to grant or withhold clearance certificates. The City issues clearance certificate immediately to any owner of the property upon receipt of required payment.

The full document can be downloaded here.

In April Realestateweb published an article on its own investigation into clearance certificate delays and billing errors within the Tshwane Finance Department. Many cases were received from the public and conveyancers and although REW referred some of the most serious of these to the council, we're still awaiting an answer.

We were asked to resubmit the examples and follow-up questions to the council on Monday, but we were told that no comment could be made until the matter was referred to the council's legal department. Thus far we have received no response.

Since the publishing of the first article more people have come forward with complaints about the "pay now, argue later" stance both the Tshwane and Johannesburg municipalities have adopted. A number of conveyancers have confirmed that there are lengthy delays in refunds and that in some cases people have given up on trying to obtain them.

Councils advise property owners to settle outstanding amounts indicated by the municipal clearance figures and to lodge disputes later. The problem, however, is that the councils more often than not, fail to provide detailed breakdowns of service and/ or rates and taxes arrears on properties, so the public has to take their word for it. Another compounding factor is that councils issue clearance figures, which includes payment estimates for 60 days to four months in advance.

The council relies on semantics to evade the DA's questions. From the examples we have obtained it is clear that most of the delays arise from disputed clearance figures. It is true that certificates are immediately issued upon receipt of payment, the council however overlooks the lengthy periods which often transpire between the issuing of the clearance figures and the final issuing of certificates.

Delays in the issuing of clearance certificates in Johannesburg have escalated to the point where members of the Johannesburg Attorney's association are considering legal action. The JAA's Property Committee scheduled a meeting with council members on Wednesday in the hope of establishing a cooperative forum to solve the matter.

Rate clearance fiasco could land in court

PRETORIA - Members of the Johannesburg Attorneys Association (JAA) are gearing for legal action against the City of Johannesburg should ongoing efforts to sort out the backlog in the issuing of municipal clearance certificates fail. The JAA's Property Committee has scheduled a meeting with the council on Wednesday, in an attempt to find a solution to a problem that threatens to become a crisis.

In April Realestateweb reported on a similar situation in the Tshwane metro and despite numerous efforts to obtain figures and an explanation from both the Tshwane and Johannesburg Metro councils, no meaningful answers have been forthcoming.

Our investigation has revealed that hundreds, if not thousands, of property transfers have been affected by delays in the issuing of municipal clearance certificates. There is however no clear picture of the cause for the delays, due to fact that councils are not sharing information with the public or the media.

The primary issue seems to be billing errors and the inability of the metros to provide detailed account breakdowns when disputes arise. The approach of the councils is "pay now, dispute later", but property owners usually wait months, even years for refunds and there are recorded cases where members of the public have simply given up on their claims for refunds.

When properties are sold, municipalities have to issue clearance certificates stating that all outstanding service bills and rates and taxes on the properties have been paid. Without these certificates no transfer of ownership can take place. The normal period for the issue of rates clearance figures is five working days, according to the City of Joburg website. The JAA confirmed that this has become the exception rather than the rule.

According to the Acting Chairman of the JAA's Property Committee Anton Theron, one of the problems appears to be the centralisation of many of the city's administrative functions. Before the centralisation Randburg, Sandton and other areas of Johannesburg issued their own clearance certificates, so there was more direct access to the administrative organs of the local authorities. He says a further problem is the implementation of the new SAP program system which has caused delays of more than seven months in cases on the West Rand. These problems persist.

Finding solutions has also been difficult: "We are just not getting any answers. The Johannesburg council expects us to provide it with information on how many properties are being affected, but this is information we need from them. Currently we are relying on the figures we are receiving from our members (attorneys) and the council is not telling us what the cause or the extent of the problem is."

In one case a small conveyancing practice in Randburg reported having 60 outstanding clearance certificates dating back to 2009. Few attorneys are, however, prepared to go on record with the media or actively engage in taking municipalities to task for fear of compromising already tenuous relationships.

The JAA hopes that Wednesday's scheduled meeting will pave the way forward. Up to now Theron says they have had difficulty in arranging regular scheduled meetings with the metro. "There has recently been a breakthrough in this regard and there appears to be willingness towards greater co-operation."

"We have indicated to the council that we are prepared to work with them on a solution, we don't just want to point fingers, if need be we'll even contribute additional personnel, but we can't begin to solve this without their (the council's) participation."

Putting a rand value to the amount of money being lost due to the delays is difficult, but the figures run into the millions even if conservatively estimated. The primary sufferers are individual buyers and sellers. Then there are smaller conveyancing practices and estate agencies that are struggling to survive due to the increasing delays in property transfers. Banks and developers are also affected and this ultimately will spill over into the cost of building and financing new properties.

By failing to respond to the situation or to divulge information the metros are not quelling speculation that something sinister might be going on.

Council inefficiencies have led to the spawning of a whole industry. More and more businesses are offering fee-based intermediary or ‘runner' services to individuals and companies. These businesses offer "to queue on your behalf" to obtain documentation, pay fees etc. and it is hard to imagine that there is no favoritism or kickbacks involved.

Reportedly all your hassles to obtain a clearance certificate will go away if you are willing to pay R700 to the right people. We asked Theron about these rumours and although he wouldn't confirm our example, he did say that the JAA has been inundated with complaints about corrupt practices within the Johannesburg City Council. The council's response was that it required proof.

Solving the problem of a bureaucracy that is either incapable or unwilling to perform a crucial function is not an easy matter, but the constitution provides potential recourse for public and business lobbies.

Article 139 of the Constitution makes provision for national ministries and provincial governments to intervene where there are municipal service delivery failures. Earlier this year the article was invoked against North West municipalities Moreletele, Madibeng, Moses Kotane and Tswaing. All were placed under provincial administration due to service delivery issues.

Articles by: Leoni Kok - www.realestateweb.co.za