The fact that a normal rates clearance certificate might indicate that a property is free from outstanding municipal services debts for the two years immediately prior to the date of application for the certificate, does not guarantee that the property is without debt before then. Unfortunately the debt will become the responsibility of the new owner on transfer (ito Section 118 clause 3 of The Local Government Municipal Systems Act).
The local authorities' preferred creditor status is being challenged in a number of cases. Buyers purchasing through sales in execution, should also be careful as they could find themselves lumbered with an unexpected burden. Apparently extended municipal debts are not usual. Roger Green of Cox Yeats says this section of the act is a most regrettable development and that it adds considerable uncertainty to the acquisition of properties.
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