Some Money Traps to Avoid
Category Buyer Advice
If you’re a homebuyer currently, it’s important to make absolutely sure now that the seller has paid off every last cent that might have been owed to the municipality before you take transfer of the property.
Previously, you might have assumed that this aspect of the transaction would have been taken care of by the fact that the local authority has to issue a “rates clearance certificate” – which states that all rates and service charges owing on the property have been paid in full – before transfer can take place.
Now, however, things are not so certain, because an Appeal Court decision taken last year means that municipalities have to issue rates clearance certificates to facilitate transfers even if sellers have only paid all the amounts due for the two years prior to the sale of a property.
In other words, there could still be large amounts outstanding for the years prior to that time period, and there is now a possibility, albeit slight, that you as the new owner could become liable for these debts once you take transfer. So don’t rely on the clearance certificate; rather ask the seller directly for proof that all municipal debts have been settled.
* Meanwhile, if you are a seller, don’t forget to give your bank 90 days’ notice of your intention to cancel your bond – or you could have to pay a hefty penalty equal to several months’ bond interest, which could be put to far better use to reduce your new loan.
Author: Barry Davies