Why a Seller needs a Rates Clearance Certificate.

Why is a Rates CLearance Certificate necessary?:

A rates clearance certificate (RCC) is a document obtained from the City Council that certifies that the Seller does not owe any money to the City Council.

When the Purchaser becomes the owner of the property, no money will be owed by the Seller. The Registrar of Deeds acts as a policeman on behalf of the City Council and will not transfer a property from the Seller to the Purchaser unless the conveyancer presents a RCC when lodging the documents in the Deeds Office. Payment of Rates before Transfer The conveyancer calls upon the City Council for rates clearance figures. The figures are worked out by the City Council and NOT the conveyancer. The RCC will include arrears for rates and taxes, electricity and water and sewerage and refuse and will also include an advance portion which is discussed below. It is important to note that the Seller will be responsible for all accounts opened in respect of the property sold. Once the rates clearance figures are received, the conveyancer will present them to the Seller to ensure the correctness thereof and ask for payment. Whose responsibility is it to obtain a Rates Clearance Certificate? It is the Seller's responsibility to pay all amounts needed to obtain the RCC. The Seller must pay the conveyancer (and not the City Council directly) who will pay the City Council as the City Council requires rates figures to be paid. The RCC must be obtained and paid for before the lodging of transfer documents in the Deeds Office. Sellers should let the conveyancer have copies of all municipal accounts to expedite the application process. Once the conveyancer has obtained funds from the Seller and paid for and obtained the RCC, the Seller's account at the City Council will be in credit and the Seller can discontinue paying monthly rates as a result of the credit. Why must the Seller pay in advance? The City Council will claim rates and taxes, electricity, water, sewerage and refuse for a period of 90 -120 days in advance. The law related to the RCC says that a RCC must be valid for a period of 60 days from the date of issue of the RCC by the City Council. The City Council gives the Seller 1-2 months to pay and thereafter the RCC is valid for the 60 day period. Should the amount not be paid in time and the figures expire, new figures will need to be obtained. Will the Seller be refunded by the Conveyancer on Registration? The conveyancers will NOT refund any funds to the Seller on registration. The conveyancers have been instructed by the City Council of Johannesburg not to refund the Seller for any amounts paid past the registration date. When does the Seller get a refund from the City Council and how? After registration and once the municipal charges are transferred to the Purchaser's accounts there is usually a credit left on the Seller's municipal accounts. This means that the Seller is owed a refund by the Council. The Seller has to expressly request a refund from the municipality, it does not happen automatically. The Seller should complete a Refund Application wherein the Seller’s banking or postal details are specified. The Council will thereafter provide the Seller with payment of the refund directly in due course.