SUBMISSION BY L MAGCOBA

Proposed Amendments to Section 118 (4) of the Systems Act Government Gazette 2 July 2007: No: 30034: Notice 822 of 2007

I would like to propose that the above section of the Municipal Systems Act be amended. This section concerns the transferring of residential property funded by a sphere of government, without paying the municipal debt.

Proposed Amendment

The current position of section 118(4)(a) allows for the transfer of residential property, funded by a sphere of government, without the need for any municipal arrears having to be paid.

I propose that this sub-section be amended to make the transferees who can afford to pay the debt to pay for such debt and for those transferees who cannot afford to pay, to be exempt from such payment. The proposal i3 that an amendment to this

effect should be in line with the current Credit Control and Debt Collection By­law/Policy of all municipalities.

It is my observation that transferees who can afford to pay are hiding behind this piece of legislation to circumvent paying their municipal bills.

The proposal is that the section 118 (4) of the Systems Act be amended by the insertion of subsection (4) (c). The proposed wording for subsection 4 (c) is as follows.

[(c)  subsection 4(a) does not apply to those debtors who do not qualify as indigents as catered for in a municipal Credit Control and Debt Collection Policy as required in terms of section 96 and 97 (c): ]

Section 118 with the proposed amendment is attached hereto marked Annexure A and this shows the deletions are struck out and the insertions are in brackets and in bold [ ].

Please feel free to contact the writer hereof should you deem it so necessary.

Yours faithfully
L Magcoba

ANNEXURE A

118 Restraint on transfer of property

(1) A registrar of deeds may not register the transfer of property except on production to that registrar of deeds of a prescribed certificate­

(a) issued by the municipality or municipalities in which that property is situated; and

(b) which certifies that all amounts that became due in connection with that property for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties during the two years preceding the date of application for the certificate have been fully paid.

(1 A) A prescribed certificate issued by a municipality in terms of subsection (1) is valid for a period of 120 days from the date it has been issued.

(2)   In the case of the transfer of property by a trustee of an insolvent estate, the provisions of this section are subject to section 89 of the Insolvency Act, 1936 (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.

(4) Subsection (1) does not apply to­

(a) a transfer from the national government, a provincial government or a municipality of a residential property which was financed with funds or loans made available by the national government, a provincial government or a municipality; and

(b) the vesting of ownership as a result of a conversion of land tenure rights into ownership in terms of Chapter 1 of the Upgrading of Land Tenure Rights Act, 1991 (Act 112 of 1991) [; and

(c) subsection 4(a) does not apply to those debtors who do not qualify as indigents as catered for in a municipal Credit Control and Debt Collection Policy as required in terms of section 96 and 97 (c): ]

Provided that nothing in this subsection precludes the subsequent collection by a municipality of any amounts owed to it in respect of such a property at the time of such transfer or conversion.

(5) Subsection (3) does not apply to any amount referred to in that subsection that became due before a transfer of a residential property or a conversion of land tenure rights into ownership contemplated in subsection (4) took place.