The municipal clearance certificates backlog shot up to nearly 45,000 due to the Johannesburg City Council’s inability to process these certificates, says property role players.
This is heading for a crisis whereby property transactions worth billions of rands are not being processed and thus leaving conveyancing attorneys, home sellers and buyers as well as estate agents in a dead-end street.
Lew Geffen, chairman of Sotheby’s International Realty, describes the situation as a massive heart attack for the economy of the City of Gold.
He says his company’s cash flow is already 40% lower than normal.
A clearance certificate serves as proof that the property tax was paid and is necessary to conclude a property transfer at the Deeds Office. When a property changes owners, the conveyancing attorney has to apply for a clearance certificate at the City Council.
Without it, the transfer will be rejected at the Deeds Office.
This issue has been dragging on for several months and clients who had sold their houses in 2009 are still awaiting their property tax clearance figures in order to get a clearance certificate. The process should normally not take longer than a few days.
The Johannesburg City Council says the problem is due to a software issue after recently switching to a new system.
However, role players in the property industry say there were problems even before the new system was introduced.
Jonny Novick, CE of Vered Estates, says it has always been a struggle to get clearance certificates issued, largely due to a shortage of staff and probably also a skills shortage.
He says the solution lies in companies in the private sector that are active in the property market, including banks and estate agents, establishing an organisation to assist the city council to wipe out the backlog as soon as possible.
Martin Strydom, senior partner at the legal firm Louw & Heyl, says the firm has at least 150 transactions for which transfers cannot be submitted. “Legal firms are taking flack from buyers and sellers, but our hands are tied.”
He says the municipality should consider privatising the issuing of clearance certificates.
Two first-time home buyers, Anneli Groenewald and Janine Robberts, waited for four and a half months for their clearance certificate to be issued. Although it was already requested on 22 January this year, it was only issued on 7 June. Groenewald says if everything went according to plan, the transaction would have been completed by the end of March.
Due to the fact that they were tenants and did not expect delays with the clearance certificates, they gave notice to their landlord at the end of February.
The sellers did not want to grant occupation before the transfer was completed, which left them without accommodation for three months.
Source: Elma Kloppers, Sake24
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