Bridging Finance Partners
Enabling Property Transfers When Liquidity Is Limited
High municipal clearance figures often create immediate cash flow challenges, particularly where funds are tied up in a pending property transaction – the solution – bridging finance.
What Is Bridging Finance?
Bridging finance is a short-term funding solution used to settle municipal clearance figures so that:
- A Rates Clearance Certificate can be issued
- The property transfer can proceed
- The advance is repaid from transfer proceeds
How Bridging Finance Service Providers Works with MDS
Where appropriate:
- We assess each matter to determine whether funding is required, noting that clients are often upfront about their need for financial assistance.
- We introduce you to our select panel of trusted bridging finance providers listed below.
- Applications to apply for facilities are directly with the bridging service providers and/or in conjunction with the transferring attorney.
- We work closely with transferring attorneys and chosen bridging finance service provider to diligently reduce high clearance figures.
- Once the Municipality and MDS reach agreement on the settlement amounts, all parties are advised of the total amount payable, which becomes immediately due.
- The financier settles the required amounts.
- The Municipality issues a rates clearance certificate, enabling transfer and lodgement in the Deeds Office.
- The property is registered in the Deeds Office, and the funding is repaid on transfer.
This ensures the uninterrupted progression of transfers while lawful full and final settlement reductions are being finalised.
Our Role
- MDS does not provide bridging finance
- We facilitate introductions to trusted, transaction-focused funding partners
- All funding decisions and terms are handled directly between the client and the financier
Why This Bridging Finance Synergy Adds Value
Our relationship with bridging finance providers is highly complementary:
- MDS reduces what is legally owed through proper full and final settlements — no shortcuts, no comebacks.
- Financiers provide the liquidity to proceed
This allows for:
- Faster transaction completion
- Reduced financial pressure on clients
- Continued pursuit of lawful reductions
- We remove the stress for all parties
- Working in conjunction with this network of professionals we all make sure that everything is legitimate and above-board
- No comebacks
When Bridging Finance May Be Needed
Bridging finance is typically used where:
- Clearance figures are high and funds are not immediately available
- Proceeds are tied up in a transfer
- Transactions are time-sensitive or distressed
Our Trusted Bridging Finance Service Providers:
A Practical, Structured Solution
Bridging finance is a strategic tool that enables uninterrupted property transfers while municipal account resolutions are being diligently finalised.
Practical Illustration
Scenario
A property owner owes a legitimate municipal debt of R450,000. Although the Municipality may only require payment of R80,000 to issue a clearance certificate and allow the transfer to proceed, this does not mean that the remaining R370,000 is written off or falls away.
If the Municipality becomes aware of the transfer in time, it is obliged to act. In practice, this can result in the Municipality taking steps to frustrate the transfer, including seeking to interdict the transaction or attach the proceeds. When this happens, the entire transfer process is disrupted, and all parties involved — seller, purchaser, and financier — are negatively affected.
Even where the Municipality does not act before transfer is completed, the position does not improve for the seller. The remaining balance of R370,000 remains fully and legally enforceable. In terms of the Municipal Systems Act, the Municipality does not have a discretion — it has a legal duty and obligation to pursue all outstanding debt.
This means that, after transfer, the Municipality will continue its debt collection processes, which may include appointing debt collectors, instituting legal proceedings, and obtaining judgment against the seller. Importantly, this risk does not disappear over time. In terms of the Prescription Act, amounts relating to rates and taxes may remain enforceable for up to 30 years, allowing the Municipality to pursue the seller long after the property has been sold.
If not properly addressed, this creates ongoing financial exposure, legal risk, and uncertainty, undermining the very purpose of the transfer.
In Practice
- The legally required clearance figures may reflect only R80,000 (typically covering the most recent two years).
- The remaining R370,000 is classified by the Municipality as “historical debt.”
Important Clarification
- “Historical debt” does not relate to previous owners.
- It refers simply to amounts older than two years that remain unpaid.
- In this example:
- The full R450,000 is legitimately owed by the current owner.
- The R80,000 is the minimum required to obtain a clearance certificate.
- The balance of R370,000 falls within the scope of Section 118(3).
Without proper legal interrogation, this distinction is often misunderstood — leading to underpayment, overpayment, or misallocation of liability.
What MDS Does
MDS conducts a detailed legal and technical analysis to ensure that both components of the debt are reduced to the correct, legally compliant amount — without shortcuts.
Illustrative outcome:
- R80,000 reduced to R50,000
- R370,000 reduced to R200,000
Total liability reduced from R450,000 to R250,000
The Result
- All municipal debt is properly and lawfully settled
- No risk of future collection or disputes
- No exposure to municipal interference or pressure
- Bridging financiers are comfortable providing funding due to the reduced legal risk
- The transfer proceeds smoothly and without delay
- The seller achieves a substantial financial saving
Conclusion
This creates a powerful synergy between legal resolution and financial facilitation — ensuring that transfers proceed efficiently, securely, and at the lowest lawful cost.
Our Services include:
At the Municipal Debt Specialist, we offer comprehensive services to address all aspects of Municipal debt with regards to Clearance figures and Clearance Certificates, ensuring a smooth and efficient property transfer process. Our expert team is dedicated to managing and resolving Municipal debt issues with precision and professionalism.
- Clearance Figures Reduction and Settlement: We specialise in reducing and settling high clearance figures to obtain a Clearance Certificate in accordance with Section 118(1) of the Municipal Systems Act. This service is essential for all types of property transfers, including normal sales, deceased estates, repossessions, properties in possession, auctions, sheriff sales in execution, sequestrations and liquidations.
- Insolvency Act Historical Debt Reduction and Settlement: Our team effectively deals with and settles outstanding historical debt as per Section 118(2) and Section 89 of the Insolvency Act. This service ensures that all historical debts are addressed, particularly in cases of liquidations or sequestrations, protecting both sellers and buyers from lingering liabilities.
- Outstanding Historical Preferential Debt Reduction and Settlement: We handle the reduction and settlement of outstanding historical debt under Section 118(3) of the Municipal Systems Act. Our meticulous approach ensures that all debts related to the property are resolved, safeguarding property owners from future claims or stresses.
- Bridging Finance Solutions: To further enhance our service offering, we have partnered with bridging finance companies that can bridge the amounts payable to the Municipality.