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?
CITATION: Brits, R. 2014. 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? Stellenbosch Law Review = Stellenbosch Regstydskrif 25(3):536-548.
The original publication is available at https://journals.co.za/content/journal/ju_slr
The Supreme Court of Appeal's decision in City of Tshwane Metropolitan Municipality v Mathabathe 2013 4 SA 319 (SCA) may have some implications for the interpretation of section 118(3) of the Local Government: Municipal Systems Act 32 of 2000. This subsection provides that municipal debts constitute a "charge" upon the immovable property to which the debts relate. In other words, municipalities are afforded a type of statutory real security right that secures payment of the debt. A potential problem with the decision is that one could read it to mean that the municipality's security right is enforceable against successors in title, hence that it continues to exist even after the property has been transferred to a new owner. This prospect is controversial because it could have the effect that a later owner is held liable for the municipal debts incurred by a previous owner. Just as problematic, the municipality's charge would enjoy preference above the claims of mortgagees. This contribution discusses the case and briefly considers whether the supposed interpretation is sustainable. A suggestion is made regarding the way in which section 118(3) should be interpreted so that it makes practical sense, has fair consequences and is in line with section 25(1) of the Constitution of the Republic of South Africa, 1996. The conclusion is that the municipality's charge is not enforceable against successors in title, but that it must be enforced before or at transfer of the property.