Page 62 - Q&A.indd

Clarity at last! A new owner is not responsible
for the municipal debt of the previous owner

September 2017

“I’ve been following the running debate in the media over
the last few years about whether the municipality can hold a
new owner responsible for the municipal debts of the previous
owner. I understand now that the matter has been decided on
by the Constitutional Court. But is it really resolved?”

You are correct to note that the matter has been the topic of a lot of
media exposure as several of our courts have had a stab at interpreting
the provisions of section 118 of the Local Government Municipal
Systems Act 32 of 2000 (“Systems Act”).
Section 118(3) of the Systems Act has been a great cause of concern
for home owners, as this section has been viewed as enabling a
municipality to hold a new home owner responsible for the arrear
municipal debts of a previous owner. According to this section, an
amount due for municipal service fees, property rates and other
municipal taxes, levies, etc, is a charge upon the property and enjoys
preference over any mortgage bond registered against the property,
thereby creating a security provision in favor of the municipality for
the payment of the outstanding debts. No time limit is attached to this
Property provision and it does not matter when the secured debt became due.

Last year, the Gauteng High Court (Pretoria) declared section 118(3)
constitutionally invalid. Following this, the Constitutional Court in
Jordaan and Others v City of Tshwane Metropolitan Municipality and
Others recently had to consider the meaning and constitutionality of
this particular subsection. The Constitutional Court concluded that a
new owner is not liable for the previous owner’s historical municipal
debts arising before transfer of the property.
The Court noted that section 118(3) does not require the charge
against the property to be either registered or noted at the Registrar of
Deeds. There is no indication that the right given to the municipalities
has an effect on third-parties. Further, there is no provision to fulfil the
publicity requirement which is central to the functioning of limited real
rights. The section stands alone, unsupported and with no express
wording holding any suggestion that it is transmissible.
In contrast, the court looked at the Land and Agricultural Development
Bank Act 15 of 2002 which was enacted soon after section 118(3) took

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