Homeowners are not liable for previous owners’ debt

GERMISTON, South Africa - Oct. 15, 2014 - PRLog -- In recent times there has been great concern about municipalities transferring the historical debt of previous owners to the new home owner and in some cases refusing to connect services for new purchasers or disconnecting the existing services of the current owner.

Simon Smith Business of Harcourts Full Circle real estate group said the municipalities concerned had seized upon a May 2013 judgment by the Supreme Court of Appeal to hold owners and purchasers liable for arrear rates, taxes and service charges owed by the previous owner.

The good news is however that a recent Judgement involving the City of Tshwane has corrected the misperception that municipalities can take action against homeowners for a previous owners debt.

The Judgement handed down last week in the North Gauteng Division of the High Court, said that “A successor in title to a property does not become co-principal debtor regarding the principal debt to the municipality and is not liable for the payment of historical debts incurred by previous owners or occupiers of the property. The security of the lien held by the municipality was extinguished by the transfer of a property to a subsequent owner. The outstanding debt owing by the previous owner, remains owing by that owner. It is unaffected by the transfer of the property to a new owner. So it remains due by the owner that incurred the debt to the municipality.”

Accordingly any person who had been forced to pay debt incurred by a previous owner should immediately be refunded by the municipality concerned.