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Chief Registrar's Circular 02/2018

26 April 2018

Chief Registrar’s Circular No. 2 of 2018

Lodgement of Rates Clearance Certificates in terms of the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000)

In terms of section 118 (1) of the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000), a Registrar of Deeds is restrained from registering the transfer of property except on production of a prescribed certificate, issued by the municipality in which that property is situated, which certifies that all amounts that became due in respect of that property during the two years preceding the date of application for the certificate, have been fully paid.

2. In terms of section 118 (1A) of the Act, a prescribed certificate is valid for a period of 60 days from the date of issue thereof. However, it is a prevailing practice of certain municipalities to issue such certificates for a period longer than the prescribed 60 days.

3. Where a rates clearance certificate bears a period of validity longer that the prescribed period of 60 days, the Registrar of Deeds shall, subject to the provisions of section 4 of the Interpretation Act (Act No. 33 of 1957), only calculate 60 days of such period from date of issue of the certificate in line with section 118(1A) of the Act. The remainder of the period must consequently not be considered for the purposes of registration of transfer.

4. Chief Registrar's Circulars 10 of 2004, 11 of 2005 and 8 of 2008 are hereby withdrawn and substituted with this Circular.

5. Date of Commencement of the Circular
This circular will come into operation on 10 May 2018. The method of calculation referred to in paragraph 3 is therefore applicable to all deeds lodged on or after 10 May 2018.

Chief Registrar's Circular No. 2 of 2018

Reader Comments: 14
Andrew Smith 19/04/2018:

I am not sure I understand the logic in this circular? Surely the prescribed period must mean a minimum of 60 days? It can't mean a maximum because that would be counter-productive. The conveyancers would have to keep applying for new rates clearance certificates and that would create much extra work for the deeds office also. If the municipality wishes to insist a seller pay for more than 60 days in advance, that cannot prejudice the process vis a vis the deeds office in any way. Now, we as conveyancers usually call for rates figures as early as possible in case the municipality has incorrect or incomplete records.

This gives everyone some time to cause the municipality to correct the issues. (The City of Johannesburg, for example, often needs to correct incorrect accounts that have resulted from poor administration on their part). If there are any extraordinary delays in the transfer, the transfer may well take longer than 60 days to register and we are going to have to waste time and energy on re-applying for figures before we can lodge at the deeds office. And there seems no good reason or logic in creating this extra work / burden on the processes?

Dudley Lee 19/04/2018:

I believe all registrars were given the opportunity to make inputs regarding the circular prior to it being finalised and issued. It would be interesting if one could understand the arguments leading to the issuing of the circular. Neither the provisions of section 118 of the Municipal Systems Act nor the provisions of section 4 of the Interpretation Act appear to support the conclusion that a rates clearance certificate issued in terms of Act 32/2000 cannot be issued for a period exceeding 60 days. Can the reasoning be explained please?

John Christie 20/04/2018:

I share the sentiments of the two authors above. When this circular was issued, I immediately emailed the office of the CRD and asked whether, given the fact that the CRD has now invoked section 4 of the Interpretation Act, a rates certificate - where the 60th day falls on a Sunday or public holiday - the rates certificate would still be valid the next working day. I have had no response yet.

Dudley Lee 20/04/2018:

I asked the question above to ascertain that there were not some argument or legal provision we are not aware of, other that the references to the two already mentioned sections. Surely section 4 of the Interpretation Act was never intended to, and cannot be used to, pin down a period as it is now done by this circular. It is to be used only to determine when a period already mentioned in a section of a law or contract, etc. is deemed to start and when it ends. But there is nothing in that section that can be interpreted as limiting, in this case, local authorities from issuing rates clearances for periods that exceed 60 days.

It must be assumed that the intention of the legislator was that the 60 days validity period in section 118(1A) Act 32/2000 is a minimum period. In the Cape Province the old Ordinances that were repealed by Act 32/2000 determined the validity of a rates clearance in such a way that a clearance that was issued on the 1st of July of year one had a validity period of 15 months, i.e. the validity ended at the end of September of the next year. It was a pity in my view, and I do not know why section 118(1A) of Act 32/2000 was amended, when the validity period in section 118 (1A) Act 32/2000 was amended in 2008 to reduce the validity period of rates clearances from 120 days to 60 days, especially in view of the old ordinances that provided for a validity period of rates clearances of some 395 days!

That may be overkill, but it worked very well for many years. The effect that this circular will have on the public involved in transfers of immovable property may turn out to be severe - all fees payable to local authorities will have to be paid at least double in many, if not most, cases, time will be lost which will have a huge effect on interest payable by parties, etc. Conveyancer's time will be wasted as well as in these cases their staff must perform these repeats of work already done in the first place. The circular needs to be reconsidered as a matter of urgency.

Dudley Lee 24/04/2018:

CRC10/2004 paragraph 5 deals with section 4 of the Interpretation Act vis-à-vis clearances that lapse on Sundays and public holidays. Hope we will get some response from CRD about the matter soon.

Magnus Steenkamp 26/04/2018:

Total madness, I'm afraid. Imagine doing a big development and trying to juggle numerous rates clearances so that they don't expire before registration. It seems as if we are hell-bent on moving backwards in this country, why on earth would the Deeds Office voluntarily want to increase their and our workload by having to re-apply for rates clearances that have lapsed? Reconsider please, for goodness sake!

Corrie Minnaar 30/04/2018:

As a conveyancing secretary, I would like to stress the fact that with especially Klerksdorp City Council it is known that they are mostly off-line and by the time you receive your clearance figure and/or certificate it is almost on it's expiry date of 4 months. We do request the Deeds Office to please reconsider. It is a nightmare for us to obtain figures in the North-West.

Liora Bamberger 01/05/2018:

Does this mean that if I obtain a Clearance Certificate valid for 4 months in advance, the deeds office will not accept it if the transfer comes up for registration in the 3rd month? And that I must count 60 days from the date of issue which is a random date during the month, and not the month-end? Please can somebody clarify this. Thanks

Marleen Gresse 03/05/2018:

Our further problem with electronic clearance applications is that the Council puts a issue date on the certificate (for e.g. 6/04/2018), but then date of signature was for e.g. 23/04/2018 - you can only print after signature date, but deeds office will now work on 60 days from date of issue. Just like that you lost 3 weeks of the 60 days already!! There is no way with current municipal processes (and the added SPLUMA chaos in some provinces), that this circular can work. We hope it will be reconsidered.

Traci Galbraith -van Reenen 04/05/2018:

Liora - I would also like confirmation but it does seem to mean exactly that - count 60 days from date of issue irrespective of date of expiry on the certificate. I currently have a certificate valid to 30 June 2018 but it was issued on 4 April 2018. 60 days from 4 April 2018 takes you to Sunday 3 June 2018. So does that mean my certificate will only be accepted by the Deeds Office until Friday 1 June 2018 or is Monday 4 June still fine? Either way is still unfair to the seller who has paid his rates to 30 June 2018?

AJ Swart 05/05/2018:

I agree with the Registrars interpretation of section 118 (1A) of the Act, but then it must be consistently applied. Thus any time limit set by the Local Authority must be irrelevant. It follows logically that if the Local Authority should stipulate a shorter time than 60 days that time should be ignored by the Registrar because the certificate is valid for sixty days form date of issue and registration of transfer must be registered if it falls within the sixty days. Regarding the expiry of the 60 days on a Sunday or Public Holiday sec 3 of the Interpretation Act provides that the last day would then fall on the next day which is not a Sunday or Public Holiday.

MAGNUS STEENKAMP 07/05/2018:

AJ Swart, that being the case, does it then follow that we have hundreds of thousands of illegally registered transfers which were registered ultra vires the Municipal Systems Act by virtue of rates clearances that were, in effect, invalid at the time of registration?

Allen West 10/05/2018:

CRC 2/2018 has been withdrawn and superseded by CRC 4/2018. However, only the implementation date has been extended until July.

CLIVE VALENTINE 10/05/2018:

I feel compelled to add my voice in support of the comments of Andrew Smith & Dudley Lee. Furthermore, I would also suggest that it would be grossly unfair & iniquitous for the Municipalities to claim payment for say 120 days in advance as the City of Cape Town does and yet the rates clearance issued only has validity for 60 days from date of issue! Such a grossly unfair situation could surely not have been intended by the legislature? With respect I believe that the CRD circular is an incorrect interpretation of the Municipal Systems Act and should be withdrawn.

The only sensible interpretation one can place on section 118(1A) I believe is that the period reflected is to be a minimum period. Municipalities are thereby required to take note and ensure that they collect their rates accordingly during the transfer process. I submit that there is nothing that prevents a Municipality from issuing a clearance for a period longer than 60 days and the Registrar of Deeds should accept the validity period as reflected on the certificate.

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