When selling a property, one of the key legal documents required is the Rates Clearance Certificate (RCC), which must be obtained by the conveyancer from the local municipality. This certificate verifies that the seller has no outstanding municipal payments on the property, and it is a critical step before the property can be transferred to the buyer.

The Importance of a Rates Clearance Certificate

A Rates Clearance Certificate (RCC) confirms that the seller is up-to-date with all municipal charges, including rates, taxes, water, electricity, sewerage, and refuse collection, for a period of up to two years prior to the RCC application date. Without this certificate, the Deeds Office cannot authorize the transfer of the property from the seller to the buyer.

This requirement applies to both freehold properties and sectional title properties.

Settlement of Outstanding Municipal Fees

Once the conveyancer requests the rates clearance figures from the local City Council, the seller must pay any outstanding fees related to the property. These include not only the arrears but also an advance payment covering municipal services such as rates, taxes, electricity, water, sewerage, and refuse for a 60-day period.

This advance payment is mandatory by law and is calculated based on figures provided by the City Council. Sellers are typically given 1-2 months to settle these payments. The issued RCC will then remain valid for a 60-day period. If the payment is not made in time and the figures expire, new rates clearance figures must be requested, causing delays in the property transfer process.

It’s also essential for the seller to understand that they are responsible for any municipal accounts opened for the property, even if the accounts were initiated by tenants.

Who is Responsible for Obtaining the RCC?

The seller is responsible for ensuring that the RCC is obtained by paying all outstanding amounts. It is crucial to note that these payments are made to the conveyancer, not directly to the City Council. The conveyancer, using a trust cheque, will then make the necessary payments to the City Council to facilitate the issuance of the RCC.

The RCC must be acquired and paid for before the conveyancer can lodge the transfer documents at the Deeds Office. To speed up this process, sellers should provide the conveyancer with copies of all relevant municipal accounts.

How Does the Seller Receive a Refund?

Once the property is registered and the buyer takes over the municipal account, the seller may be due a refund from the City Council if there is a credit balance. However, this refund process can take approximately 6 to 9 months as the Council reconciles the seller’s and buyer’s accounts.

Sellers should not assume that the refund will be automatic. It is important to formally request the refund from the municipality, which involves completing a refund application form. This form will include your banking or postal details and is often signed with the help of the transferring attorney. The City Council will then process and issue the refund directly to the seller.

By understanding the RCC process and timelines, sellers can ensure smoother property transfers and avoid unnecessary delays.