A rates clearance certificate (RCC) is a document obtained from the City Council that certifies that the Seller does not owe any money to the City Council. When the Purchaser becomes the owner of the property, no money will be owed by the Seller. The Registrar of Deeds acts as a policeman on behalf of the City Council and will not transfer a property from the Seller to the Purchaser unless the conveyancer presents a RCC when lodging the documents in the Deeds Office. In other words the Registrar of Deeds is ensuring that the Purchaser does not become responsible for any of the Seller’s outstanding debts for municipal accounts on the property.

RATES CLEARANCE CERTIFICATES ARE NEEDED FOR FREEHOLD PROPERTY AND SECTIONAL TITLE PROPERTY

From 1 August 2008 Sectional Title Properties are treated the same as freehold properties and each sectional title property owner will receive a rates account from the City Council. This means that a RCC must be obtained before Sectional Title properties may be lodged and registered in the Deeds Office just as in the case of freehold properties.

PAYMENT OF RATES BEFORE TRANSFER

The conveyancer calls upon the City Council for rates clearance figures. The figures are worked out by the City Council and not the conveyancer. The RCC will include arrears for rates and taxes, electricity and water and sewerage and refuse and will also include an advance portion which is discussed below. It is important to note that the Seller will be responsible for all accounts opened in respect of the property sold, even if accounts were opened by tenants. Once the rates clearance figures are received, the conveyancer will present them to the Seller to ensure the correctness thereof and ask for payment.

WHOSE RESPONSIBILITY IS IT TO OBTAIN A RATES CLEARANCE CERTIFICATE

It is the Seller’s responsibility to pay all amounts needed to obtain the RCC. The Seller must pay the conveyancer (and not the City Council directly) who will pay the City Council as the City Council requires rates figures to be paid with a trust cheque. The RCC must be obtained and paid for before the lodging of transfer documents in the Deeds Office.

Sellers should let the conveyancer have copies of all municipal accounts to expedite the application process.

Once the conveyancer has obtained funds from the Seller and paid for and obtained the RCC, the Seller’s account at the City Council will be in credit and the Seller can discontinue paying monthly rates as a result of the credit.

WHY MUST THE SELLER PAY IN ADVANCE

The City Council will claim rates and taxes, electricity, water, sewerage and refuse for a period of 90 -120 days in advance. The law related to the RCC says that a RCC must be valid for a period of 60 days from the date of issue of the RCC by the City Council. The City Council gives the Seller 1-2 months to pay and thereafter the RCC is valid for the 60 day period. Should the amount not be paid in time and the figures expire, new figures will need to be obtained.

WILL THE SELLER BE REFUNDED BY THE CONVEYANCER ON REGISTRATION

The conveyancers will not refund any funds to the Seller on registration. The conveyancers have been instructed by the City Council of Johannesburg not to refund the Seller for any amounts paid past the registration date.

WHEN DOES THE SELLER GET A REFUND FROM THE CITY COUNCIL AND HOW

After registration and once the municipal charges are transferred to the Purchaser’s accounts there is usually a credit left on the Seller’s municipal accounts. This means that the Seller is owed a refund by the Council. The Council takes approximately 6 to 9 months to reconcile the Seller’s and Purchaser’s accounts and pay the refund. The Seller has to expressly request a refund from the municipality, it does not happen automatically.

The Seller should complete a Refund Application wherein the Seller’s banking or postal details are specified. The Council will thereafter provide the Seller with payment of the refund directly in due course.

CITY OF JOHANNESBURG

OPENING OF NEW ACCOUNTS BY THE PURCHASER

Should the property transferred be a sectional title unit, no action need to be taken and the city council will transfer the rates account in the ordinary course.

There are different types of accounts at the city council, these being the rates account and the service accounts.

Purchasers will not receive rates or services accounts for some time after registration of the transfer and as such need to make provision for these anticipated costs.

On registration of transfer the conveyancers send a letter to the City Council notifying them that the transfer has taken place.  The conveyancers will advise the city council of all relevant information relating to the transfer and the date of registration.

The Deeds Registry also independently notifies the city council of the transfers that have taken place.

 

After transfer the city council will transfer the rates account from the Seller to the Purchaser.  The transfer of this account should be done by the city council without the need for any intervention from the parties.  This process should take approximately 30 days from registration of transfer but could take several months.

Prior to the transfer of the rates account from the Seller to the Purchaser, the Purchaser will not be permitted to open any services account.

To check when the rates account has been transferred Purchasers can call 011 375 5555 and log a service request to have the rates account transferred.  

As an alternative Purchasers can visit the city council’s premises at Thuso Property, 61Jorrisson Street or any Regional Service Centre. 

Details of the nearest regional service centre are available online at www.joburg.org.za . There are over 20 options available for the greater Johannesburg area. Purchasers can visit  the centre most convenient regardless of where the property is situated.

Note that service levels and advice given by the city council will vary.

Once the rates account has been transferred from the Seller to the Purchaser the Purchaser can open up the applicable service accounts.

Service accounts include Water, Pikitup, Electricity supplied by City Power.  Should electricity be supplied by Eskom please refer to the Eskom procedure to open and close an account.   In some instances water will be supplied directly by the properties home owners association or body corporate in which case the home owners association or body corporate must be referred to.

In order to open the service accounts Purchasers can visit the city council’s premises at Thuso Property, 61Jorrisson Street or any Regional Service Centre.  (as above)

Note that the city council no longer allows for tenant accounts to be opened and accounts can only be opened in the registered owner’s name. (Thus the city council’s reason for insisting the rates account be first transferred to the Purchaser before new service accounts be opened).

The Purchaser will need the following in order to open an account:

 

The information above for individuals as may be applicable:

 

CLOSING ACCOUNTS

For rates accounts, the Seller is not required to do anything.  For service accounts the Seller should complete a ‘Cancellation of Consumer Agreement Form’ at the regional service centre or Jorrisson Street.

Provided that the rates have been transferred and the Purchaser has paid a deposit and opened the services account, the city council will bill the Purchaser for rates and services from the date of registration of transfer and debit the Purchasers new account accordingly.

Until this point in the process the Seller would still be receiving accounts from the City Council and would have noted that the credit on the account is being used up by the Purchasers rates and consumption charges.  In other words until the Purchaser has opened new accounts all charges on the account, for example, for rates, water, electricity, sewerage and refuse will be billed to the Seller’s municipal accounts and the Seller will continue to receive monthly statements.  When the city council debits the Purchasers new accounts, the Seller’s accounts will be credited. It is at this stage that the Sellers refund is processed and paid out.

OCCUPATION BEFORE REGISTRATION OF TRANSFER

Should the Purchaser occupy the property prior to registration of transfer, the Purchaser is liable for electricity and water consumed.  These individual arrangements are not accounted for by the city council and as such the parties should make provision for the Purchaser to reimburse the Seller directly for any consumption charges incurred prior to registration of transfer.

OCCUPATION AFTER REGISTRATION OF TRANSFER

Should the Seller likewise remain in occupation of the property after registration of transfer the Purchaser will be liable directly to the city council for these charges.  As such the Seller should pay to the Purchaser the consumption costs even though the Seller may have paid his own account in advance.

GENERAL

In order to draft this article the City of Johannesburg was approached for information as were various city council consultants and other sources.  The information offered by the City of Johannesburg varied from person to person.  It is to be understood that in dealing with the City of Johannesburg sellers and purchasers are not going to always find consistency.  The various time periods and procedures are going to vary to some degree.

Should a satisfactory result not be achieved it is recommended that the services of a city council consultant be utilised.  Please contact us for recommendations in this regard where necessary.

EKURHULENI METROPOLITAN MUNCIPALITY

The requirements of the Ekurhuleni Metropolitan Municipality are the same as that of the City of Johannesburg above, save that:

It is not a requirement that the rates account be transferred from the Seller to the Purchaser before the Purchaser can open the services account;

The contact details for Ekurhuleni are as follows:

Call centre no:       0860 543 000         

Web site address: www.ekurhuleni.gov.za

Each customer care centre has its own email address, direct number and physical address listed on the above website.

ESKOM

There are certain defined areas where properties are billed by Eskom for electricity supply and not City Power.

The local Eskom service Centre can be located at the corner of Kort and Rivonia Road, Johannesburg and the call centre number is 086 003 7566 and the website address is www.eskom.co.za.

CLOSING OF SELLERS ESKOM ACCOUNT

The Seller is required to close his account with Eskom. To do this the Seller can either phone the national Call Centre number on 0860037566 and advise Eskom of the date of termination of electricity supply together with banking details for any refunds due, or go to his/her nearest Eskom Service Centre.

 Eskom will stop electricity service supply from the date of moving out and closing of the account.

 Whether the Seller goes to the Service Centre or calls the National number, they will need to provide the following:

Property description

Meter numbers

Final meter readings (these can be jotted down by the Sellers – no further proof is necessary)

Bank details (in the case that a refund is due)

OPENING OF PURCHASERS ESKOM ACCOUNT

Purchasers are required to open a new account with Eskom for electricity supply.

Purchasers can either phone the national Call Centre number to open this account and arrange to effect payment of the required deposit, or they can visit their nearest Eskom Service Centre.

Eskom will require the following information:

Property description

Identity Document

Offer to Purchase or letter from the Attorneys confirming that transfer has taken place

Meter numbers and meter readings as at date of occupation

The Purchaser will be required to pay a deposit of: