Individual owners must take charge of own rates

WITH the Municipal Property Rates Act having become fully operational from July last year, all sectional title units in SA will be independently rated by local municipalities. Rates will no longer be the responsibility of the body corporate; instead, each individual owner in a complex needs to pay rates directly to the municipality.

Sifiso Msomi of Shepstone & Wylie’s property department warns owners that local authorities are now much more likely to take action against defaulting non-payers as they now have the names and addresses of all sectional title owners.

“Failure to pay rates can result in the forced sale of your property by the municipality to recover the monies owed,” Msomi says.

“Municipal charges take preference over bonds, and banks need to be aware that units that are in rates arrears could be sold out from under them.”

Msomi says it is also advisable to avoid disputes when selling a unit and to include a clause in the agreement of sale which states the date from which the buyer will be liable for levies and rates.

The eThekwini municipality started implementing the act from July last year.

Msomi says the general basis of the valuation is the amount that a property would realise if sold on the date of valuation on the open market by a willing seller to a willing buyer.

In the case of sectional title properties, the valuer must determine the value of each sectional title unit in the scheme.

Various factors are considered in the valuation, such as whether there is a swimming pool in the scheme, the individual size of a unit, its view, and other factors that may create price differences between units in the same scheme.

By definition, a sectional title unit is a section together with its undivided share in the common property. Common property therefore does not have a separate value in the market place, its value being inherent in the value of each unit. So only the units in the scheme will be rated and not the common property.

In addition to all the usual sectional title documentation, conveyancers now have to lodge a rates clearance certificate issued by the local municipality as proof that outstanding monies have been paid. Mention must be made on this certificate that provision has been made for the separate rating of the unit.

Article by: Thabang Mokopalene - www.businessday.co.za