The Statutory Security Right in Section 118(3) of the Local Government: Municipal Systems Act 32 of 2000 – Does it Survive Transfer of the Land?

• Jurisdiction: South Africa
• Citation: (2014) 25 Stell LR 536
• Published date: 16 August 2019
• Date: 16 August 2019
• Author: Reghard Brits
• Pages: 536-548

536

THE STATUTORY SECURITY RIGHT IN

SECTION 118(3) OF THE LOCAL GOVERNMENT:

MUNICIPAL SYSTEMS ACT 32 OF 2000 – DOES

IT SURVIVE TRANSFER OF THE LAND?

[DISCUSSION OF CITY OF TSHWANE METROPOLITAN

MUNICIPALITY V MATHABATHE 2013 4 SA 319 (SCA)]

Reghard Brits

BComm LLB LLD

Postdoctoral Fellow, South African Research Chair in Property Law, Stellenbosch

University*

1 Introduction

Section 118 of the Loc al Government: Municipal Systems Act 32 of 2000

(“LGMS Act”) provides for two interrelated but also seemingly independent

mechanisms that secu re a municipal ity’s claim for the payment of “municipal

service fees, sur charges on fees, propert y rates and other mu nicipal taxes,

levies and duties” that ar e overdue with re spect to immovable property

(henceforth referred to a s “municipal debts”). Hence, the sect ion seemingly

establishes statutor y real secur ity rights in favour of mun icipalities. The

recent decision of the Supreme Court of Appeal (“SCA”) in City of Tshwane

Metropolitan Municipality v Mat habathe1 (“Mathabathe”) cal ls for a closer

look at especially section 118(3).

Section 118(1) contains an “embargo” or “veto” provision in terms of which

the municipality will refuse to issue a so-called clearance certicate un less all

municipal debts for the precedi ng two years have been settled i n full. If the

certicate is not issued, the registrar of deeds may not register the transfer of

the propert y concerned. This r ule is conrmed by section 92(1) of the Deeds

Registries Act 47 of 1937. Therefore, as the title of section 118 indicates, the

municipality’s security involves a restra int on the transfer of the property until

such time as the amount s due for the previous two years have been paid. T he

payment of this “two-year debt” is effectively se cured in this manner and

naturally it is preferent to al l other claims that might have to be paid f rom

the pro ceeds of the sale of t he property, except for certain qualications in

insolven cy law.2

* Thank you to Cha ntelle Gladwin, An dré van der Walt, Gerhard Br its and the two anonymou s referees for

their valuable c omments

1 2013 4 SA 319 (SCA)

2 S 118(2) of the LGMS Act stat es that the sectio n is subject to s 89 of the Insolve ncy Act 24 of 1936

(2014) 25 Stell LR 536

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