If you are selling your property, it is required that your conveyancing attorney secures a Rates Clearance Certificate from your local municipality before any transfer of ownership can take place.
To help you understand this process, we have answered some frequently asked questions about Rates Clearance that every property seller should know about.
What Is Rates Clearance?
Rates Clearance or Rates Clearance Certificate (RCC) is a document which a municipality or local authority grants on application by a conveyancer to transfer a property. This certificate verifies that the seller of the property does not owe any amount of debt on the property with regards to rate and utilities.
After this verification, the Registrar of Deeds may pass the transfer of the property and proceed with the registration of the purchaser’s name.
How The RCC Process Works
During the change of ownership, the conveyancer or transfer attorney will apply to the council/municipality/local authority for an RCC.
The local authority will require all rates, taxes and utilities to be up-to-date and paid in full. The buyer will be charged 3 months rates in advance and the seller 3 months utilities in advance. After all the payments are in order, the conveyancer will receive the RCC.
Without the RCC, the Registrar of Deeds will reject the transfer, needlessly prolonging the change of ownership process.
After successful registration and termination of the utility account, the local authority will refund the seller any balance paid in advance by the Seller. Although the Deeds Office notifies the municipality of registration this only triggers a change in name in respect of rates. The onus ultimately falls on the seller for the termination of the utilities account and submitting the required documents for any refund due to them.
Note: Depending on the council’s workload, this refund might take several months to reflect.
Rates Clearance: Freehold vs Sectional Title
As of 2008, sectional title properties are viewed in the same light as freehold titles. As such, sectional title owners will also receive a rates account from the municipality, making it compulsory for them to obtain an RCC before selling.
What Type of Debt Is Applicable to Rates Clearance?
The council or local authority will charge the seller for any arrears on the property going back two years. This includes; all municipal rates and taxes, water and sewage, electricity, refuse and other sundries.
This amount will also include all debt, which is due in advance for the next few months – while the transfer takes place. According to legislation, the Rates Clearance must be valid for 60 days from when it is issued.
If you have any questions about Rates Clearance or the RCC process, contact the dedicated team at AMC Hunter Inc today.