Can a current property owner be held liable to settle the debt of the previous owner?
A property owner can’t be held liable for settling the debt of a previous owner, and their electricity supply can’t be terminated due to the debt. The property may be sold to recover the debt, but only if the municipality follows due process. Here’s everything you need to know about historical debt
What rights do you have if your municipality threatens to cut off your electricity because the previous owner didn’t pay their bills?
Mark Robertson, director of Barry, Botha & Breytenbach Inc explains that a current owner of a property is not liable to settle the debt held by a previous owner of the property. A municipality also cannot cut off the current owner’s electricity supply based on the fact that the prior owner of the property hasn’t paid their debt.
There are municipalities that have been known to try get the debt on an account settled, by putting the responsibility on the new owner. In the case of 278 Strydom Park (Pty) Ltd v Ekurhuleni Metropolitan Municipality, the applicant sought to obtain an interdict against the municipality preventing it from terminating the supply of electricity to the property. The municipality wanted to terminate the services to the property because of the ‘historical debt’.
While a municipality cannot force the current owner to pay off a previous owner’s debt, the law does state that a municipality can have a property sold to recover the debt. In such a case, the municipality must acquire a judgment against the owner responsible for the debt. If the owner in debt does not settle the amount, an order can then be obtained by the municipality to declare the property available to be sold, even if the property has a new owner. To acquire such an order, the municipality must get in touch with all current bond holders, for them to state their opinion on the matter.
If you find yourself in a situation where your municipality has threatened to cut off your electricity due to historical debt, you can reply to them and state that any disconnection will be unlawful, and they will face a Spoliation Application with an appropriate costs order should they disconnect without a court order. If you’re looking for property for sale in East Rand, for example, you can obtain information about the settlement of all past municipal fees before making an offer to avoid buying a property that has historical debt.
