Rates anomalies

The Law Society of South Africa is about to tackle the thorny question of who is responsible for the Council's revalued rates on a sectional title development after its units have been transferred to the new unit owners. Problems arise when developers get rates clearance certificates based on the undeveloped value of the property, and then once the units are sold and transferred, the council does a revaluation, with the new rates bill (generally many times more than that which was paid by the developer on the undeveloped erf) being sent to the new erf owners.

According to Paddy Herbert, director of Propell Levy Finance Solutions, "the revalued rates bill should, of course, be for the developer's account even though the Municipality, complying with the law, send it to the unit owner - to whom it will almost come as an unwelcome surprise, especially as it can involve several thousand rand."

"Strangely," says Herbert, "even top legal personnel have been caught by this because buyers are very seldom warned to look out for it." Sectional title buyers should guard against being caught out by insisting that their purchase agreements contain a clause making the developer responsible for all rates bills related to the development and transfer of the property.

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