Thank you for the opportunity to comment on the Property Rates Bill. following submission for your consideration. Levying of Rates on Property in Sectional Title schemes
For ease of reference the relevant sections of the Bill are quoted hereunder.
1.1 Section 9
This section allows for:
We offer the
"rate on property subject to sectional title scheme must be levied on the individual sectional title units in the scheme and not on the property as a whole"
1.2 Section 22
This section allows for:
"(1) A rate levied by a municipality on a section title unit, is payable by the owner of the unit
(2) A municipality may not recover the rate, or any part of it, from the body corporate controlling a sectional title scheme
(S) A body corporate controlling a sectional title scheme may not apportion and collect rates from the owners of the sectional title units in the scheme"
1.3 Section 76
This section states that:
"(1) Section 9 does not apply in respect of rates levied against a valuation roll prepared before the commencement of this Act
(2) Section 22 does not affect the liability of a body corporate of a sectional title scheme to a municipality, nor of the owner of a sectional title unit to he b0d7 corporate, for property rates levied against a valuation roll prepared before commencement of this Act"
1.4 Section 75
This section makes provision for:
(1) Until it prepared a valuation roll in terms of this Act, a municipality may
(a) continue to use a valuation roll that was in force in its area before the commencement of this Act; and
(b) levy rates against property values as shown on that roll
(2) This section lapses four years from the promulgation of this Act, and from that date any valuation roll that was in force before the commencement of the Act may not be used
1.5 Commentary on Levying Rates in Sectional Title Schemes
·
Distinction between liability of individual section title holder as opposed to the body corporate is welcomed as it allows for speedier transferability of units in that body corporates that have huge liabilities frustrate transferability of units.
·
However, Sections 75 and 76 delay the intention of the Act for a period up to four years from the promulgation of this Act, if a valuation roll in terms of this Act has not been prepared. At present each sectional title development is valued as a single unit and depending on municipal capacity, municipalities will take time to value each unit. In essence they will take the four years allowed in Section 75.
It is recommended that the period in Section 75(2) be reduced to two years.
2. Amendment to Section 115 of Municipal Systems Act 32 of 2000 -
2.1 Section 77 amends Section 115 of the Municipal Systems Act 32 of 2000 so as to make further provision for the serving of documents.
2.2 It is our submission that the Bill should go further and amend Section 118 of the Municipal Systems Act as well. Section 11 8 states:
"118 Restraint on transfer of property
(1) A registrar of deeds or other registration officer of immovable property may not register the transfer of property except on production to that registration officer of a prescribed certificate -
(a) issued by the municipality in which that property is situated; and
(b) which certifies that all amounts due in connection with that property for
municipal fees, surcharges on fees, property rates and other municipal
taxes, levies and duties during the two years preceding the date of1 ~
application for the certificate have been fully paid.
(2) In the case of the transfer of immovable property by a trustee of an insolvent estate, the provisions of this section are subject to section 89 of the Insolvency Act, 1 936 (Act 24 of 1936).
(3) An amount due for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties is a charge upon the property in connection with which the amount is owing and enjoys preference over any mortgage bond registered against the property.
Section 118(3) contradicts section 118(1)(b) as (1)b places a two year cap for all amounts due in connection with that property for municipal service fees. In essence it is a preference over a mortgage bond registered against the property.
Section 11 8(3) gives total blanket preference for amounts due for municipal service fees, property rates, etc. and as such overrides the two year cap provided for in section 118(1 )(b).
It is recommended that section 11 8(3) be deleted in its entirety.
3. Levying of Property Rates by virtue of being the holder of a mortgage bond
3.1 Concern is expressed as to an interpretation of various definitions in the Bill viz "Property" and "Owner" which would render the holder of a mortgage bond liab{e for municipal rates.
3.1.1 Property Is defined as:
a) immovable property registered in the name of a person;
b) a right registered against immovable property in the name of a person;
c) sand
3.1.2 Owner is defined as
a) in relation to property referred to in paragraph (a) of the definition of "property" means;
i) a person in whose name the property is registered; or
ii) in the case of a sectional title scheme, a person in whose name a sectional title unit is registered.
b) in relation to a right referred to in paragraph b) of the definition of "property" means a person in whose name the right is registered or
c)……….
3.2 In considering the definitions aforesaid it may be interpreted that a bank that is a mortgage bond holder may become liable for rates due to the local authorities. However, the following factors should be taken into account:
·
A right registered against immovable property is included under the definition of property and the holder of the real right is included under the definition of owner. -
·
Section 21 in turn placed the liability of payment of municipal rates on the owner, which would include the holder of a real right.
·
The proposed bill does not define the holder of a real right.
The Deeds Registry Act defines a real right as any right which becomes a real right upon registration.
The term mortgage, in the narrow sense of the word, refers to a real right of security in an immoveable asset of another, which is created by a registration in the deeds registry pursuant to an agreement between the parties.
The mortgage bond is therefore a real right over immovable property of another which sets out the terms of obligation between the mortgagor and mortgagee.
The following are considered to be real rights for purposes of registration in a deeds office: