The most topical legal issue at the moment is the Supreme Court of Appeal overturning Oscar Pistorius' conviction for culpable and now finding him guilty of murder based on the doctrine of dolus eventualis. Even although I am a commercial attorney, I cannot ignore the significance of this decision and I must deal with it very briefly.

The conviction of Oscar Pistorius for culpable homicide was based on the court finding that he had acted negligently in killing Reeva Steenkamp. The Supreme Court of Appeal consisting of five judges, all agreed that the correct verdict was murder as Oscar Pistorius had intended to kill Reeva Steenkamp,
but the intention that he formed falls into the compartment of dolus eventualis, which is a special type of intent, formed when a murdered foresees that his conduct may kill somebody but persists with his actions in any event.

Now that's off my chest, I will stick to my knitting, which is commercial law.

Rates liability

I seem to be dealing more frequently with property transactions where the rates liability associated with the property causes the transfer to be delayed or stops the transfer completely.

The reason for this is that the municipality has to furnish a certificate indicating that all the rates in respect of a property have been paid in full before transfer can be effected. Now this may be a well-known fact, but the thorny issue is that the rates and other utility charges follow the property and not the owner. This issue can result in a position where the purchaser of the property finds himself liable for the outstanding
charges relating to the property but which were incurred by the seller.

The current position is that the municipality is obliged to furnish a rates clearance certificate if the charges in respect of the property for the preceding two years have been paid in full. This is in terms of Section 118(1) of the Local Government Municipal Systems Act, Act 32 of 2000 (the Act).

What about rates older than two years? They remain attached to the property and are payable and can cause complications when the current purchaser wishes to open accounts with the municipality or on sell the property in the future.

The Gauteng High Court has ruled that if a municipality issues the rates clearance certificate, then the municipality is obliged to supply the property with utilities and open the relevant accounts, even if there are outstanding charges older than two years, but this case relates to sales in execution.

KwaZulu-Natal is still uncertain with regards to whether the municipality is obliged to open the necessary accounts and supply utilities to a property when transfer has been effected but there are still charges in respect of the property that are older than two years.

Against this background, I would suggest that potential purchasers of property carefully assess the charges outstanding in respect of a property before committing to the purchase thereof. The rates obligations in respect of that property may be crippling and could become the purchaser's liability once the property has been transferred.

The best way that a purchaser could cover themselves is to make the sale subject to the seller making a full disclosure of the rates obligations in respect of the property, which will give the purchaser an opportunity to resile from the sale if the purchaser is unhappy with the extent of the rates liability on the property. 

Tel: +27 31 312 2064/9055
vaughan@umslaw.com
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