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New Owners and Seller's Historic Debt

 

Our Thought of the Week on Tuesday referred to the judgment in Mitchell v City of Tshwane Metropolitan Municipal Authority which we link to HERE (17 pages) for your ease of reference.

As a result of oversight, enquiries and discussions subsequent thereto, we highlight the following:

The statutory hypothec that a municipality holds over a property in respect of historic debts (debts older than 2 years) lapses when it allows transfer to pass from the owner (debtor) to a purchaser in an execution sale, without exercising its rights in terms of the hypothec.
When such auction purchaser on-sells the property to a third party as happened in the above matter, the municipality cannot refuse to provide municipal services to the third party as a result of the outstanding historic debt.
The historic debt survives the auction sale, only the security is lost, and the purchaser does not become co-debtor in respect thereof. It remains a debt between the historical debtor and the municipality in these circumstances.


05 Aug 2015
Author STBB
514 of 615

          Image courtesy of STBB
        
          Image courtesy of STBB
        
          Image courtesy of STBB