Joburg rate clearance nightmare

Property sellers in Gauteng are becoming increasingly disgruntled with the Johannesburg City Council which has fallen behind with the processing of thousands of rate clearance certificates - essential for the conclusion of property transfers.

This processing issue has already had a negative short-term effect on the Gauteng property market and needs to be addressed immediately before it has a more damaging effect.

Some of our clients who sold their homes in 2009 are still awaiting clearance figures so that they can obtain a rates clearance certificate. The normal timeframe for this process should only be a few days.

A seller will only get paid when the transfer is registered. Essentially, no rates clearance means no transfer, which in-turn means no payment.

When a property is changing ownership, the transferring attorney has to apply to the council for a rates clearance certificate. Without this, the transfer will be rejected by the Deeds office, prolonging the transfer of ownership. The local authority is required to calculate these rates, which include water and electricity, for a five month period in advance.

The conveyancing attorney does not have any control over how long the process will take as this is in the hands of the local authority.

While the rate clearance certificate should be a relatively simple part of the transaction process, it is turning into a major stumbling block for buyers and sellers as a result of the delays by The Council.

The Council has identified software migration as the cause of the processing backlog, but has yet to announce a timeframe for rectifying the problem.

The Law Society of Gauteng has recently become involved as more and more conveyance law firms have become inundated with phone calls. Some attorneys are currently evaluating whether it is viable to bring applications to court to compel the council to process the certificates more expediently.

We have always prided ourselves as having a sophisticated first-world property system in South Africa, but unfortunately it is being undermined by The Council's inability to get to grips with a new processing system. It is in the best interest of Gauteng's property market that this issue is rectified immediately.

*Jonny Novick is MD of Vered Estates

Article by: Jonny Novick - www.realestateweb.co.za