So, you’ve sold your property and are aware that the Purchaser pays all the costs of transfer. Then your Conveyancer asks you for roughly 3 times your monthly rates and utilities account to be paid to him upfront! There is the promise of a refund in respect of any over-payment made, but will this ever come through and to whom will it be paid?
Why must you, the seller, pay this? Your Conveyancers will have access to the municipality on an electronic platform for the purpose of obtaining a rates clearance certificate which is a lodgement document in the Deeds Office and is required to be able to transfer your property. In order to obtain this certificate your Conveyancer will need to request clearance figures which will include any current amounts plus an advance amount. This is paid to enable the certificate to remain valid for 60 days from date of issue and to prevent there being any amount outstanding to the municipality on transfer of ownership to the Purchaser. The Seller pays the rates figures to the Conveyancer who will then make payment to the municipality.
Where will the refund go? When signing your transfer documents as a Seller you will be asked to sign a “Rates Refund Form” issued by the municipality. This would usually have had the Sellers bank details recorded for a direct refund, but direct refunds are being phased out over the coming months and a refund can now only be made to your Conveyancer who will in turn make payment to you.
When will you get your refund? The Municipality issued a statement earlier this year saying it can take up to 5 months for the account to be changed into the Purchasers name and the refund processed. However, at present it is taking approximately 2 months from date of transfer.
The good news is The City of Cape Town is one of the more efficient municipalities and that within a few months of registration of transfer everything should be resolved! Should you have any queries in this regard please don’t hesitate to contact us for assistance.