ARREAR RATES & TAXES AND WATER & LIGHTS ACCOUNTS

In a recent case, Hoofar Investments (Pty) Ltd v Moodley 2009 (6) SA 556 (KZP), the point was taken that rates and taxes should be for the account of the purchaser, as costs incidental to the purchase of the property.

The court found that ' costs incidental to transfer ' referred to in the sale agreement of the property did not refer to liabilities such as rates and arrear water and electricity charges - clearly these costs were for the account of the seller. Please note that these costs can be deducted off the purchase price on transfer.

'Costs incidental to transfer' would only relate to the fees and sundry expenses of the conveyancers and the payment of transfer duty.

It is advisable to ascertain if there are any arrear rates or water and electricity accounts prior to making an offer to purchase, but generally the municipality will not issue the conveyancers with a rates clearance certificate unless all arrear payments have been brought up to date.

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