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THE IMPACT OF RATES CLEARANCE DELAYS ON THE CONVEYANCING PROCESS

The conveyancing process in South Africa involves multiple government and private institutions, each playing a crucial role in the transfer of immovable properties. This article focuses on the delays in municipal approval, specifically addressing the challenges associated with obtaining the Rates Clearance Certificate.

 

Rates Clearance Process

The Rates Clearance Certificate is a vital document in property transfers, and its acquisition involves a detailed process. Conveyancing law firms typically follow these steps:

  1. Application to the Municipality:

  • The application for the Rates Clearance Certificate is made to the relevant local municipality.
  • The process can be electronic or manual, with the original certificate collected in person if submitted via email.
  • Electronic applications allow for downloading the certificate from legal software.
  1. Attorney’s Report and Rates Figures:

  • The municipality issues “rates figures” to the Conveyancer, which usually makes provision for rates, water & electricity to be paid for 3 months in advance.
  • Turnaround time for issuing the “rates figures” varies among municipalities, ideally ranging from five to ten working days (currently the turnaround time is 30–60 days due to internal issues at Ethekwini Municipality).
  • Delays may arise from discrepancies in rates payments, or utilities consumption and challenges in accessing the property for investigation.
  1. Settlement and Rates Clearance Certificate:

  • The seller has 30 days to pay the outstanding amount mentioned in the “rates figures” to the conveyancers. This amount is then paid by the Conveyancers to the municipality on the seller’s behalf. (The sellers cannot pay the municipality directly, the conveyancers have to pay it on the sellers behalf once the payment has received from the sellers.)
  • Once settled, the municipality issues the Rates Clearance Certificate (typically within five working days).

 

Rates Clearance Delays

Delays in rates clearance can occur at different stages:

  1. Issuing of Rates Figures:

  • Common delays occur during this stage due to errors or irregularities related to the property, payments, or internal issues within the municipality.
  • Examples include discrepancies in building plans, incorrect charges for utilities, plus water/electricity investigations.
  1. Payment Stage:

  • Delays may arise if the seller faces financial constraints in settling outstanding rates figures.
  • Bridging finance is a common solution, but the application and approval process may introduce delays.
  1. Issuing of Rates Clearance Certificate:

  • While rare, delays at this stage may occur due to unknown reasons, potentially related to human resources or electronic system issues.

 

In conclusion, a seamless property transfer process relies on the timely fulfilment of commitments from the various institutions involved. The Rates Clearance Certificate, a critical component, faces challenges at different stages, emphasising the interconnectedness of consents and approvals in the overall transfer process. Conveyancing law firms navigate these complexities, prioritising approvals with longer processing times to ensure a smoother transaction.

 

By Jade Rietveld
Attorney, Conveyancer, Notary Public

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