Frustration at rates clearance delays for property transfers

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Frustration at rates clearance delaysDec 02 2014 07:00 Carin Smith

Cape Town – Delays in the issue of rates clearance certificates in the Cape are causing huge frustration among property buyers, sellers, conveyancers and estate agents.

Property transactions cannot be lodged in the deeds office and registered while the attorneys are waiting on these rates clearance certificate.

“There is a huge problem. We are sick and tired of struggling and are all at our wits’ end,” a conveyancer, who wanted to remain anonymous, told Fin24 on Monday.

The delays in obtaining rates clearance certificates are causing huge losses, according to another attorney, who wants to remain anonymous.

“Only bridging companies is happy with the current situation, because more agents and sellers are forced to apply for expensive bridging finance,” he told Fin24.

“On top of that there remains the uncertainty of whether the deeds office will close between Christmas and New Year. They often decide on the spur of the moment and do not think about the further delays this will cause.”

New system

The problems are caused by the implementation of a new advanced electronic rates clearance system on October 21 2014. The new system has affected operations severely, including many inexplicable error messages produced by the new system.

Members of the Property Law Committee of the Law Society of the Cape of Good Hope met with representatives from the City of Cape Town early in November 2014 in order to discuss concerns.

Subsequent to this meeting the situation deteriorated further, according to the law society. It consequently resulted in an influx of complaints from law practitioners.

Alderman Ian Neilson, the City’s Mayoral Committee member for finance acknowledged in a response to the Law Society that a number of technical problems arose with the latest implementation phase of the City’s automation of its Property value chain system, which includes the processing of rates clearance certificates.

Technical problems also arose with previous phases of implementation.

“The City fully agrees that the facilitation of property transfers are important to our city’s economy and takes the matter of efficient processing of transfers, and the City’s role in that process, very seriously,” said Neilson.

Most recently, three issues have arisen:

– Erroneous and duplicate registration of conveyancers causing them not to be able to transact online;

– A weekend shutdown of the City’s SAP system for upgrading, that impacted on available processing time;

– A strict validation system that the City implemented.

“The first issue was a once-off occurrence that received immediate attention once identified. This matter should now be resolved,” said Neilson.

Any conveyancers who still have a problem in gaining online access should immediately approach the City by forwarding an email to and quoting the error message in the subject field and in the text, provide the company name, Business Partner number, registration number and, if electronic, provide their Kref and/or LAN number.

“The second matter is again a once-off matter that has been progressively overcome,” said Neilson.

“The key matter which requires further attention, is that of the validation system which the City imposed. This was imposed in good faith in order to ensure that further steps in the City’s value chain are not impeded.”

Neilson said the City certainly understands that the issuing of rates clearance may not require all the data that the City requests, but asks conveyancers to also recognise that the City has its own needs in the process.

The City needs to be able to adequately close off accounts of the seller, refund credits to a secure bank account, open the rates and services account of the purchaser and know where and how to deliver bills to the purchaser.

The director of revenue has reassessed the data verification requirements and has agreed that some of the requirements, especially those that emanate from the City’s side, such as the pending applications due to the data verifications, should not hold up the issuing of rates clearance certificates (RCCs) and has issued instructions that work around solutions be implemented so that these payment schedules and RCC applications can be processed.

“We shall on an on-going basis review the data requirements for validation and will continue to engage the Property Law Committee in this regard,” said Neilson.

“We are cognisant of the pending Deeds Office shutdown and understand the urgency that this matter presents to conveyancers. We are pulling out all stops to address these issues as practically as possible, including working extra hours of overtime and weekends.”

Long-term view

Joe van Rooyen of Seeff in Durbanville, says, although there are some initial problems with the new system, he believes that in the long run it will be a more efficient system.

“It is correct that the city has gone on a new system. All transferring attorneys had to register as business users for purposes of rates clearance certificates with the city. The cut-off for that was October 31 2014,” explained Van Rooyen.

“The verification process thereafter resulted in a few hiccups, but once a firm has been registered the process is easier than before.”

With the old process the attorney received the outstanding figures within one day, but after payment it took between 10 and 20 days to get a rates clearance. In some extreme cases it took up to six weeks.

“With the new system, it takes about three days to get the figures. It seems the city verifies their records during this time as we had queries about the information that we have provided. After payment though, it takes about three days before they issue a clearance certificate,” said Van Rooyen.

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