A rates clearance certificate is a certificate which is issued by the relevant local municipality on application by a conveyancer for the transfer of a property.
The purpose of this document is to prove that all the outstanding debt on the property has been paid by the seller.
It is the duty of the transferring attorney to apply to the local authority or council for a rates clearance certificate.
In order for the council to issue this certificate, they will require all rates and taxes on the property to be paid up to date. Additionally, they will require at least 4 to 5 months of rates and taxes to be paid in advance.
Only once these payments have been made, will the council issue the conveyancing attorney with the clearance certificate.
The Registrar of Deeds will reject the transfer of the property without a valid clearance certificate which will prolong the change of ownership process.
Once the registration has been finalised, the seller is then entitled to a refund of the amount paid in advance.
Although the conveyancing attorney will notify the council of the registration, it’s not the attorney’s responsibility to obtain the refund. It’s the responsibility of the seller.
This refund may take several months to obtain.
Under normal circumstances, the clearance certificate is issued within 10 working days of successful application
Although the seller of the property is liable to pay all the rates and taxes as previously explained, the purchaser is liable to pay the actual rates clearance certificate fee.
According to section 118 (1A) of the Municipal Systems Act 2000, the clearance certificate is valid for a period of 60 days from the date it was issued.
For assistance with obtaining a rates clearance certificate for the transfer of property in South Africa, contact our conveyancing attorneys in Cape Town today.
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