Conveyancers be aware!
The eThekwini Revenue Management Unit recently published a contentious By-Law for public comment, which if passed will impose an onerous burden on Conveyancers. The purpose of the eThekwini Metropolitan Municipality: Credit Control and Debt Collection Amendment By-Law (the “By-Law”) is to impose certain duties on Conveyancers and related persons involved in the revenue clearance certificate process, to provide for clarity the Municipality’s approach on the combatting of improper practices relating to Revenue Clearance Certificates (“RCC”) and the consequences of engaging in such improper conduct. ‘Improper practice’ is defined in section 1 as including fraud, forgery or the uttering of a forged document. The By-Law also establishes a blacklisting committee which will be discussed below.
Revenue Clearance Certificates
Chapter 6A of the By-Law sets out the procedure for obtaining Rates Clearance Certificates alongside the duties imposed on Conveyancers. Section 34B outlines the duties of a Conveyancer in the Rates Clearance Application (“RCA”) process. According to the provision, a Conveyancer whose name appears on an application for rates figures or an application for the issue of an RCC accepts responsibility for the accuracy of the information contained in the application. The section imposes an obligation on Conveyancers to check the RCA Details Report against the seller’s municipal billing statement, the conveyancing records and the municipal valuation roll and RCC for any discrepancies between the Conveyancer’s records and those of the municipality.
In instances where a Conveyancer has instructed a lodging agent to lodge documents on their behalf at the Deeds Office, the instructing Conveyancer and lodging agent are jointly and severally responsible in ensuring the accuracy of the information furnished in the RCA and that all monies due to the municipality have been paid.
Section 34C relates to the right of a Conveyancer or any related person to apply for rates assessments. The provision states that the aforesaid right is not absolute, and the Municipality may decide to withdraw or suspend the application of assessments or RCA. The Municipality will decide on a case-by-case basis on what constitutes a good cause to withdraw or suspend an RCA, which reasons may inter alia include:
- there is reason to believe that a person is aiding and abetting an improper process;
- a Conveyancer fails to respond to a written request by the Municipality to provide information or an enquiry relating to improper practice;
- where one has lodged a RCC at the Deeds Office which is inconsistent with the details at the Municipality;
- the RCC has been used for the registration of multiple transactions in breach of Policy; or
- the matter has been lodged at the Deeds Office despite there being a debt due to the Municipality
Other Onerous Clauses:
Section 34D enables the Chief Financial Officer to investigate any allegations of misconduct and includes the power to institute legal proceedings against such offending person or entity. Section 34E states that the Municipal Manager must establish a Revenue Management Blacklisting Committee which will consider applications for blacklisting any persons involved in an improper practice. Section 34J lists the ground for blacklisting a person and these include, but not limited to:
- engaging in any improper practice;
- lodging a RCC where the person knew or ought to have reasonably known that there is an outstanding balance due to the Municipality
Where a person has been blacklisted, they will be prohibited from making an application for a RCC either manually or on the system. The Municipality can extend the blacklisting of a person to other directors, members, partners or any persons in the employ of the legal practice.
Section 34P states that in the even of a matter being registered at the Deeds Office without the municipal debt being settled and the Conveyancer or any related person ought to have reasonably known that it was not settled then the Conveyancer, director, partner or employee will be held jointly and severally liable by any competent court for the loss suffered by the Municipality.
Comments on the By-Law
Although the By-Law may have a positive effect on preventing improper conduct, it does however place an unreasonable burden on Conveyancers. Lodging Agents will be held jointly and severally liable if the By-Law is passed however, there are no measures for them to ensure that the RCCs are correct as only the firm applying for the RCC is able to see the information furnished in the Application. Conveyancers already have a statutory duty in terms of Regulation 44 of the Deeds Registries Act 47 of 1986 to ensure the accuracy of all deeds and documents being lodged for execution at the Deeds Office; the By-Law will place a heavier burden on Conveyancers if passed.