What is a rates clearance certificate and why do you need one?

Buying and selling real estate involves a lot of very important paperwork before you can let go of your home. One of the most essential documents you need while completing the transaction will be the Rates Clearance Certificate, without which you will not be able to transfer ownership.

Section 118 of the Municipal Systems Act 32/2000, states that a Registrar of Deeds may only register the transfer of a property on production of a rates clearance certificate which shows that all amounts owed in relation to the property two years prior to the application date for the certificate, have been paid in full.

This includes municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties. This applies to both sectional title properties and freehold properties.

The conveyancer you have appointed to handle the sale of the home will obtain the RCC from the city council by requesting the rates figures that show any and all outstanding debt for taxes, water, sewerage, electricity and refuse. The conveyancer will hand you the rates figures to make sure they are accurate. He/she will then request payment from you.

You must pay the amount you owe to the conveyancer and not the municipality directly within 1-2 months. The conveyancer will then transfer the funds to the municipality, who requires that rates figures to be paid with a trust cheque. Once you’ve obtained the RCC, which is valid for a period of 60 days, you will no longer be required to make further monthly payments to the municipality. The property is now ready to be registered in the buyer’s name.