Author: Chloe Brooks
When selling your property, one of the documents that must be lodged at the Deeds Office, is a Rates Clearance Certificate.
What is a Rates Clearance Certificate?
A Rates Clearance Certificate is a document obtained from the relevant municipality, in which they certify that the Seller does not owe any money in respect of their charges.
Who pays and how?
The transferring attorneys will apply for the rates figures from the relevant municipality. These figures include the current outstanding amount, any arrears, as well as 60-days’ advance collections. Once received, the transferring attorneys will present these figures to the Seller who will then pay this amount to the transferring attorneys. It is important to note that the amount must be paid to the attorneys and not directly by the Seller into the usual rates account, as this will result in a 21 -day processing delay at the municipality, which will result in a delay in the transfer process. Sellers are therefore advised to follow the transferring attorneys’ instructions with regard to rates clearance payments. Once the funds reflect in their trust account, the transferring attorneys will then pay the municipality and submit the proof of payment as well as additional information that the municipality requires.
The Rates Clearance Certificate is, however, paid for by the Purchaser.
How long is a Rates Clearance Certificate valid?
The certificate is valid for a period of 60 days from the date of issue.
When does the Seller receive a refund?
Once the property is registered in the new owner’s name at the Deeds Office and municipal charges are transferred to the Purchaser’s account by the relevant municipality, there may be an amount in credit due to the Seller. The municipality will pay the refund to the Seller or the transferring attorney, depending on the seller’s instructions at the time that the application for a rates clearance certificate was submitted. The refund, if any, is not paid immediately after registration as there are processes that must take place at the municipality before the refund is paid.
Conclusion It is therefore important for homeowners to be up to date with rates payments to the municipality. If not, it can become costly when wanting to sell their properties.