Law Reports

Hoofar

Duty of seller to pay municipal rates and charges: In Hoofar Investments (Pty) Ltd v Moodley 2009 (6) SA 556 (KZP) the buyer, Moodley, bought immovable property from the seller, Hoofar Investments (Hoofar), in terms of a contract, which provided that the buyer would be liable for 'costs incidental to transfer'. The seller was unable to effect transfer of the property in the name of the buyer as it could not get a clearance certificate because of arrears outstanding in respect of municipal rates and charges. When sued for transfer of the property, the seller raised the defence that the duty to pay municipal rates and charges lay on the buyer as provided for in a clause that made the latter liable for costs incidental to transfer. The High Court held that liability to pay municipal rates and charges and thus obtain the clearance certificate lay on the seller. An appeal to the full court was dismissed with costs on attorney and client scale as provided for in the agreement.

Levinsohn DJP said that costs incidental to transfer of the property did not refer to liabilities such as rates and arrear water and electricity charges. 'Incidental' referred to costs that were directly connected to the conveyancing process such as those connected with obtaining a lost title deed or searches in the deeds office. It was incumbent on the seller to have obtained a clearance certificate. The dispute between the seller and the municipality relating to rates and charges was of no concern to the buyer. There was therefore no basis on which the buyer's right to claim transfer could be thwarted or delayed by the issue of non-payment of rates and charges.

De Rebus website

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