11 APRIL 2014




Did you know that:

Your property could be repossessed, to clear historical municipal debts (incurred by previous owners)?

This could happen in spite of the Municipality having issued a Rates & Taxes Clearance Certificate?

Or, if you have just taken transfer of a property, the Municipality may unlawfully refuse to enter into a consumer agreement with you and thereby deny you your constitutional right to basic services such as water & electricity?

Some Municipalities’ are disconnecting services on properties where there are no current debts owed by the owner?

Surely this cannot be so, particularly in our constitutional democracy?

Municipal Systems Act:

In 2002 the Legislature introduced the Municipal Systems Act No. 32 of 2000.

This transformative piece of legislation instilled the Municipalities with their powers, duties and obligations. This act specifically provides that the Municipalities must enforce credit and debt collection policies efficiently on any outstanding amounts that are due and owing to them.

It is well documented that the Municipalities in general have failed dismally with this obligations. Municipal debt has ballooned to such an extent that the very viability of Local Government is threatened. It is critical that Municipalities implement effective credit control and recover outstanding debt.

Unfortunately, instead of tackling this huge problem correctly and diligently the Municipalities are now attempting to take the “easy way out” and solve the problem retrospectively.

Section 118 of the Municipal Systems Act:

Municipalities are now attempting to hold new owners liable for their incompetence by relying on a misinterpretation of s118 of the Municipal Systems Act.

Every property in South Africa gets transferred by an appointed transferring attorney.

In terms of s118(1) of the Municipal Systems Act the registrar of deeds may not register a transfer of ownership unless he is provided with a clearance certificate, issued by the relevant Municipality, certifying that monies owed to it for the previous two years have been settled.

Most people make the false assumption that when the Municipality issues this Clearance Certificate, it confirms that “all debts on the property have been paid in full”. This is not the case.

Up until 2013, most people, including the Municipalities themselves, understood that the municipalities must enforce payment against the consumer/owner of Municipal Services.

Change in Municipal procedure:

The Municipalities’, emboldened by a misinterpretation of an order from Supreme Court of Appeal in City of Tshwane vs Mathabathe, have now changed their approach.

Municipalities are now unlawfully attempting to recover previous account holders’ debts from whoever the current owner is, notwithstanding the fact that the new owner never consumed these services.

This is happening every day and on a very large scale to innocent victims who do not have the legal expertise nor the financial resources to take on government institutions with unlimited finances.

This is particularly outrageous when one considers that Municipalities actually caused the accumulation of these municipal arrears.

These Municipalities have all the powers at their disposal to ensure that properties never get into large arrears.

Why do they not follow the Municipal Systems Act and their own By-Laws? Why do they not prevent a property from accumulating huge arrears? Why do they not follow do due process and sue the consumer for these arrears?

It is clear that these debts would not be outstanding if proper procedures were followed in the first place by the Municipalities.


The ramifications of this Municipal practice is far reaching and may result in:

•Municipalities transferring previous owner’s debts to whoever is the current owner and make them responsible for payment, refuse to supply services to the property, suspend services already being supplied, take judgment for the amounts not paid and ultimately repossess the new owners’ properties to recover the previous high municipal arrears.

•The Banks in turn would lose their security as the Municipality enjoys preference of any Bond Holder.

•The previous debtors will have effectively enjoyed usage of services for free.

•The municipalities will no longer need their debt collecting panel of attorneys and firms for day to day debt control, as they can simply transfer the previous debts to new owners.

•The Municipalities in effect are claiming the right to chose who to execute against and that “when they feel like it” a debt becomes a “debt on a property and not a debtor”.

•Ultimately they are claiming the right to “expropriate” innocent ratepayers land in order settle the accumulated debts of a previous owner.

This is patently unfair, both morally and legally, and cannot go unchallenged!

New Ventures Consulting & Services:

New Ventures Consulting & Services (a division of the Livanos Group – Livanos) have been appointed by Banks, Liquidators, Deceased Estates, Trustees, Sheriff Sales in Execution, Buyers, Sellers, Transferring Attorneys to reduce and settle all the appropriate arrears in terms of the law and has successfully concluded in excess 10,000 transactions over the past 11 years.

Due to their expertise in this area and commitment to its clients, Livanos has successfully challenged some of the Municipalities actions in the High Court of South Africa during December 2013 to February 2014.

Success in the Courts:

As an interim measure, Livanos obtained court orders against The Ekurhuleni Metropolitan Municipality and The City of Tshwane Metropolitan Municipality.

These court orders compelled the respective municipalities to immediately restore the unlawfully disconnected electricity and water and enter into the required consumers agreements for their clients that were refused.

Livanos at their own risk and cost protected the above clients by approaching the High Court.

Livanos Indemnified their clients in the event of any future issues with the reduced and lawfully settled amounts as negotiated with the respective municipalities.

Livanos paid for all the Legal Costs in the matters set out above.

The main application (part B) of the court cases regarding the above Municipalities will hopefully be determined shortly in the High Court of South Africa.

Fighting for the Nation:

The Livanos Group, is effectively fighting for the rights of the nation.

If the municipalities continue to misinterpret their powers the South African property market, economy, individuals, entities, the banks etc. will suffer irreparable damages and harm.

Clearly the Municipalities new practice flies in the face of their constitutional obligations and the noble aims of the Municipal Systems Act.

It is worth remembering, that the overriding purpose of the Municipal Systems Act, is set-out in its preamble, that reads:

• Whereas the system of local government under apartheid failed dismally to meet the basic needs of the majority of South Africans;

• To provide for the core principles, mechanisms and processes that are necessary to enable municipalities to move progressively towards the social and economic upliftment of local communities, and ensure universal access to essential services that are affordable to all;

• …to empower the poor and ensure that municipalities put in place service tariffs and credit control policies that take their needs into account by providing a framework for the provision of services, service delivery agreements and municipal service districts; to provide for credit control and debt collection; to establish a framework for support.

• …and to empower municipalities to move progressively towards the social and economicupliftment of communities and the provision of basic services to all our people, and specifically the poor and the disadvantaged;

It is difficult to reconcile these noble aims, set out above, with the current actions of the Municipalities.

Livanos is committed to achieving justice for all, at their own expense, especially the poor & previously disadvantaged.