Homes can’t be sold to pay for someone else’s debt

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The Constitutional Court has been asked to ensure that property owners don’t have their house sold to pay back debt owing to municipalities from previous owners.

The court was asked to confirm the North Gauteng High Court order last year that a new owner cannot be held liable for the water‚ rates and lights debts of the old owner or owners.

The Tshwane and Ekurhuleni municipalities argue that the municipal debts belong to the property and municipalities can sell a house to recover their debt dating up to 30 years.

But this means the new home owners are liable for debts they didn’t even know about.

But this means the new home owners are liable for debts they didn’t even know about.

The high court found against the municipalities and called their plan to seize properties for debts of a previous owner an “arbitrary deprivation of property” in terms of Section 25 of the Constitution and found this was unreasonable and unjustifiable.

The businesses and owners in this case asked the Constitutional Court on Tuesday to confirm this order.

Also admitted as friends of the court were The TUHF Limited‚ a public company that provides investors with funding for the refurbishment of inner city properties in Ekurhuleni‚ Tshwane and elsewhere‚ and The Banking Association of South Africa.

A spokesman from TUHF says it would be “catastrophic” to the property industry if new owners had to lose their homes to pay old debts from previous owners.

TUFH also argued the municipality needs to recover debt sooner and use measures such as discontinuing lights and water or suing the person liable for debt rather than waiting years and seizing property from a new innocent owner.

The Banking Association‚ a friend of the court‚ also argued that if municipalities could seize properties it would affect the security of mortgages given by banks. Banks can lend large sums of money to people to buy property‚ because banks are able to take back the property if the mortgage is not paid. If the municipality could claim properties‚ it means banks have no surety for lending money for property.

TUFH explained that this would mean banks wouldn’t lend money to people to buy homes or would lend smaller amounts. The municipality argued new owners should be aware of debts going back 30 years and buy the property at a reduced price.

But rates clearance certificates explaining outstanding debts at the Deeds Office only go back two years.

Bowman’s Conveyancing lawyer Bobby Bertrand praised the High Court judgment that the Constitutional court was asked to uphold.

“A lot of fair minded lawyers (myself included) agreed with and were happy that it put a stop to a provision that was too heavily weighted in favour of the municipality at the cost of the new ‘innocent’ owner.”

Katharine Child – Tiso Black Star Group/TimesLIVE

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