FOR THE RECORD / SOUTH AFRICAN MUNICIPAL CLEARANCE LAW
Section 118(1), (2) and (3) of the Municipal Systems Act
What each subsection actually means for property transfers, clearance figures, insolvent estates and historical municipal debt — explained in clear language, with the legislation and our Constitutional Court litigation as the foundation.
Municipal Debt Specialist · Established 2002 · The landmark Jordaan Constitutional Court litigation
01 / QUICK OVERVIEW
Section 118, explained in 30 seconds.
The Act contains separate mechanisms that are often mistakenly treated as a single rule. Understanding the distinctions can help prevent avoidable financial and transfer-related problems.
Most important misconception: Paying the amount required for a Section 118(1) certificate does not automatically cancel older debts legitimately owed by the seller. Conversely, our Jordaan Constitutional Court judgment confirms that a previous owner's Section 118(3) charge does not pass to the innocent new owner after transfer.
02 / THE PRIMARY SOURCE
See Section 118 in the actual legislation.
These aren't merely MDS interpretations. The statutory provisions appear in the Local Government: Municipal Systems Act 32 of 2000, under the heading Restraint on transfer of property.
What to notice in the wording
One section. Different legal effects.
118(1): controls the evidence the Deeds Office requires before registration.
118(1A): sets the certificate's 60-day validity.
118(2): addresses the special position of a trustee transferring property from an insolvent estate.
118(3): creates a security mechanism and municipal priority over registered mortgage bonds before ownership changes.
The images alongside are original MDS archival artwork. Refer to the linked legislation for the current operative statutory text.
03 / THE TRANSFER REQUIREMENT
Section 118(1): Why the clearance certificate matters.
Section 118(1) prevents the Registrar of Deeds from registering a property transfer without the prescribed municipal certificate. It concerns amounts that became due during the two years before the application for that certificate.
In plain English
A certificate is needed to register transfer. That certificate confirms payment of the prescribed two-year amounts.
The municipality calculates the relevant charges and issues clearance figures. The conveyancer ordinarily coordinates the application and payment. In appropriate circumstances, MDS may also assist in obtaining and evaluating clearance figures.
It is not a two-year debt-amnesty scheme. An older claim may still need to be investigated and properly resolved.
Actual figures and certificates can look different between municipalities.
A related rule people often miss
SECTION 118(1A)The 60-day certificate window.
Once issued, the prescribed clearance certificate is valid for 60 days. This is a certificate-validity rule, not a promise that the municipality will complete processing within 60 days.
Delays can mean fresh processing, updated figures or additional professional work. It is one reason to identify unusually high charges early, rather than waiting until registration is imminent.
See what clearance figures and certificates look like ↗Practical question: “What must be paid to obtain the certificate?” is not necessarily the same question as “What legitimate municipal debt remains owing after that payment?”
04 / INSOLVENT ESTATES
Section 118(2): Why insolvency transfers are different.
This subsection deals with property transferred by the trustee of an insolvent estate. It expressly makes Section 118 subject to section 89 of the Insolvency Act 24 of 1936.
It is not the subsection that creates the general municipal security over property. That is Section 118(3).
The distinction matters when creditors, bondholders, trustees or conveyancers are working through a sequestration or another transaction with insolvency implications. Creditor ranking, secured claims and the circumstances of the estate need case-specific legal analysis.
Do not assume: a calculation appropriate for an ordinary sale can automatically be carried into an insolvent-estate transfer.
05 / THE HISTORICAL DEBT ISSUE
Section 118(3): The security and mortgage-bond preference.
Section 118(3) establishes a charge over the property for unpaid, legally recoverable municipal amounts and provides preference over registered mortgage bonds. The charge operates independently of the two-year clearance mechanism in Section 118(1).
Before transfer
Municipal enforcement may still be possible.
In an appropriate case, a municipality can pursue recoverable debt against the existing owner and may seek court relief preventing a transfer while its rights are enforced. The consequences for a bank's security and sale proceeds may be significant.
After transfer
The charge does not become the new owner's burden.
In our landmark Jordaan Constitutional Court litigation, the Court ruled that the Section 118(3) charge does not survive transfer to burden the purchaser with the previous owner's debt.
Crucial distinction: the new owner's protection does not mean that the seller's genuine personal debt has been written off, or that a municipality is unable to take lawful action before transfer.
06 / OUR CONSTITUTIONAL COURT HISTORY
We weren't watching the Jordaan litigation from the sidelines.
The joined Constitutional Court proceedings included the City of Tshwane v New Ventures Consulting and Services and Ekurhuleni v Livanos matters. This litigation formed part of the landmark judgment delivered on 29 August 2017.
The Court confirmed that the Section 118(3) charge could be enforced against the existing owner before transfer, including through appropriate proceedings, but did not survive registration to burden the new owner with historical debts incurred by someone else.
MDS draws on this direct litigation history and extensive practical experience to help property stakeholders understand the difference between the statutory certificate, recoverable debts and sensible pre-transfer risk management.
Primary judgment: Jordaan and related appeals [2017] ZACC 31.
07 / PRACTICAL EXAMPLE
What a R450,000 municipal account can mean in practice.
Consider an illustrative case where the entire R450,000 is assumed to be genuinely owed by the seller and legally recoverable. The municipality calculates a lower amount for the two-year clearance requirement.
Example only / no representation of an actual MDS matter
Payment of the R80,000 may satisfy the relevant certificate requirement, but does not establish that the remaining R370,000 has been extinguished. Equally, the amount listed by a municipality is not automatically proven correct or fully recoverable.
Actual outcomes depend on source documents, the character and age of each charge, prescription, statutory rights, billing accuracy and the circumstances of the transaction. This is not a quotation, promised reduction or legal opinion on a specific account.
Taking the figures at face value
Risks leaving mistakes unchallenged, misunderstanding the statutory certificate, or allowing genuine older debt to surface later.
Investigating the full municipal position
Allows each relevant charge and legal issue to be examined before a lawful, documented resolution is considered for an accepted matter.
Request a free assessment before paying, settling or accepting risky informal advice.
08 / HOW MDS WORKS
Specialist municipal debt analysis is more than pressing the two-year button.
For accepted matters, Municipal Debt Specialist examines the wider account position rather than assuming that the certificate alone settles all legal and commercial questions.
Assess the submitted figures
Review the clearance documents, the current transfer position and the available account history. We may assist in obtaining clearance figures in appropriate circumstances.
Interrogate relevant variables
Consider subsections (1), (2) and (3), billing accuracy, liability, allocations, prescription, recoverability, municipal processes and other case-specific factors developed through experience.
Seek a lawful resolution
Where a matter qualifies, work towards appropriate corrections, a properly documented settlement or another lawful resolution with the relevant parties.
Free initial assessment
Normally within one business day.
We generally respond to an initial assessment request within one business day, often on the same business day during working hours.
Straightforward accepted Ekurhuleni matters
Typically 5–10 business days.
Our experience-based timeframe for uncomplicated specialist audits and lawful reductions or resolutions. Complex cases or external municipal processes can take longer.
Neither timeframe is guaranteed and neither represents a promise of municipal certificate issue, Deeds Office registration, a particular reduction or final outcome.
09 / IMPORTANT CONSUMER PROTECTION
Beware of unverified rates consultants and unlawful “shortcuts”.
Property owners struggling with high municipal debt may be approached by unofficial intermediaries offering extraordinary reductions or promising to alter municipal accounts through personal contacts.
Improper payments, unauthorised adjustments or other suspicious conduct can create serious complications. In some matters MDS has encountered, irregular activity has prompted municipal account reviews, restrictions or forensic investigations, leaving property transfers delayed and the underlying debt disputed.
A legally justified reduction is different from account manipulation. Not every suspected irregularity results in a particular penalty or criminal process; the consequences depend on evidence, municipal powers and applicable law.
MDS will not participate in bribery, fraudulent changes or compromised municipal accounts and may decline matters where suspicious interventions prevent a proper independent assessment.
Early referral matters: before funds are paid, third parties intervene, an account is disputed or the transfer is held up, obtain the figures and seek a credible independent assessment.
10 / WHEN TO INVOLVE MDS
The right time is before the problem becomes entrenched.
Clearance figures received? Send them early.
The transferring attorney typically handles the application. Once figures are available, the seller or authorised attorney can ask MDS to examine whether a specialist intervention is appropriate. We can sometimes assist with obtaining figures where circumstances permit.
Our priority is clarity and lawful resolution before payments, settlements or dubious third-party activity leave fewer options.
11 / USEFUL DOCUMENTS AND NEXT READING
Read further, with the original sources.
Complimentary MDS publication / 7 pages
Rates Clearance Certificates & Figures
Keep a companion explanation of the municipal certificate and figures process for future reference. The current webpage should take precedence if the older publication uses wording that has since been refined.
Our in-depth legal guide
The full Section 118 analysis
For the broader judicial history, multiple case authorities and stakeholder-specific risks.
Read the complete legal guide ↗Know the actual documents
Clearance figures vs certificate
Examine practical examples and the difference between the documents.
View the document examples ↗The historical record
Our Constitutional Court journey
Read how Livanos and New Ventures were involved in the historic dispute.
Explore our Jordaan story ↗An older MDS Section 118 leaflet also appeared in the previous page. Its Section 118(2) wording requires editorial/legal updating before it should be distributed as a current legal guide; it has therefore not been presented here as a fresh download.
12 / FREQUENTLY ASKED QUESTIONS
Short answers to the questions we encounter most.
What is Section 118(1) of the Municipal Systems Act?
It requires a municipal clearance certificate before registration of a property transfer, certifying payment of qualifying amounts that became due in connection with the property in the preceding two years.
What does Section 118(1A) say?
The certificate issued under subsection (1) is valid for 60 days from issue. This does not set a 60-day processing deadline for the municipality.
Does Section 118(2) deal with all historical municipal debt?
No. It addresses the transfer of property by a trustee of an insolvent estate and makes Section 118 subject to section 89 of the Insolvency Act. The general municipal charge is dealt with in subsection (3).
Does Section 118(3) allow the municipality to claim older debt?
The statutory charge is independent of the two-year certificate rule and may secure older amounts that remain legally recoverable against the property while still owned by the debtor. Prescription and other legal issues must be examined case by case.
Can a new owner be held liable for the previous owner's Section 118(3) charge?
No. In our 2017 Jordaan Constitutional Court litigation, the Court declared that the Section 118(3) charge does not survive transfer so as to burden a new owner with debts incurred by a previous owner.
Does paying the two-year clearance amount cancel all other municipal debt?
No. Payment necessary for the statutory clearance certificate does not, by itself, amount to a write-off or full-and-final settlement of older amounts.
How soon will MDS respond to my free assessment?
We normally respond within one business day, often on the same business day. Accepted straightforward Ekurhuleni audits and lawful reductions typically take 5–10 business days where no complications arise. Neither timeframe is guaranteed.
Can MDS handle a transfer outside Ekurhuleni?
We currently prioritise Ekurhuleni property-transfer clearance cases. Matters elsewhere may be considered individually, but acceptance is not guaranteed. We do not handle ordinary monthly billing complaints as part of this service.
THE NEXT SENSIBLE STEP
Do not mistake a clearance certificate for a complete debt solution.
Whether you are a property owner, conveyancer, financial institution or property practitioner, send unusually high Ekurhuleni clearance figures for a free, no-obligation assessment before making important payment or settlement decisions.
Normal initial response within one business day · No upfront MDS professional fees on accepted success-based mandates · Individual eligibility and terms apply · No guaranteed reduction or processing time.
For broader enquiries, visit the Free Clearance Help Desk.