Monthly Archives: May 2018

New owner not responsible for previous owner’s debt

The Application of Section 118(3) of the Municipal Systems Act by the municipalities had the implication that in some cases new owners had their electricity cut off, or have been unable to open a municipal account, because they have been held responsible for debts, sometimes adding up to hundreds of thousands of rands incurred by a previous or multiple previous owners.

Section 118(3) states that “An amount due for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties is a charge upon the property in connection with which the amount is owing and enjoys preference over any mortgage bond registered against the property”. Section 118(3) creates a charge over the property in favour of the municipality.

The days of uncertainty concerning the inheritance of historical debt from previous owners and the worry of municipal services being suspended are over following the Constitutional Court Judgement delivered on 29 August 2017 in Chantelle Jordaan and Others v City of Tshwane Metropolitan Municipality and Others.

In order to avoid unjustified arbitrariness in violation of Section 25(1) of the Bill of Rights which prohibits arbitrary deprivation of property which would happen if debts without historical limit are imposed on a new owner of municipal property, the Court held in an unanimous judgement that section 118(3) must be interpreted so that the charge it imposes does not survive transfer to a new owner.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)