Can You Be Held Responsible For A Previous Owners Unpaid Bills?
Category Property Advice
Find out what your rights are if a municipality threatens to cut off your electricity because the previous owner of the property didn't pay his bills.
Can you imagine receiving notice that your electricity is going to be disconnected because the previous owner of your home owes the municipality money? In other words you are going to have to pay for someone else's debt because the municipality concerned didn't bother to chase up the bad debt while the previous homeowner lived on the property. It may seem unbelievable, but there are municipalities out there that will do just about anything in an effort to balance their books by attempting to pin the responsibility of the debt on to an innocent party.
In a recent newsletter published by attorneys Barry, Botha Breytenbach Inc, a reader noted that he was faced with this exact scenario and that the municipality concerned was threatening to cut off his electrical supply because of historical debt that was close to five years old.
So, can a municipality disconnect your power and force you to pay up?
The short answer is no, not unless they have got a court order. Even then it is unlikely that a court will grant permission for a municipality to hold the current homeowner responsible for the debt.
Mark Robertson, director Barry, Botha Breytenbach Inc explains:
In the recent judgment of Stand 278 Strydom Park (Pty) Ltd v Ekurhuleni Metropolitan Municipality the applicant sought to obtain an interdict against the municipality preventing it from terminating the supply of municipal services to the property. The municipality wanted to terminate the services to the property because of 'historical debt' relating to the property ie. municipal debt in relation to property rates, taxes and charges for the provision of municipal services pertaining to all prior owners of the property.
In this case the court confirmed that a current owner (“current owner”) of property is not liable for arrear debt or charges on accounts held by previous owners of the property (“prior owners”) and a municipality is not entitled to terminate the supply of services to the current owner on the grounds that the prior owners of the property are indebted to the municipality.
The court however also confirmed the law as it currently stands - that a property can provide security for a municipal debt and that it may happen that a new owner's property is declared executable for the municipal debt of a previous owner and that the municipality can sell a property in execution to recover such arrear debt. However the municipality must follow the following procedure:
In the event that there is historical debt relating to the property, the municipality must first obtain a judgment against the party legally responsible for such debt i.e. the relevant prior owner.
Only once such a judgment has been obtained and the prior owner fails to settle the historical debt as required by the judgment order, can the municipality proceed to obtain an order to declare the security in relation to that historical debt to be executable - the security being the property of the current owner.
To obtain such an order against the property, the municipality must join all parties having an interest in the matter, such as the current owner and bond holders (with registered bonds over the property) in order to allow each party to state their interest and defend the granting of an order to execute against the property.
What should homeowners do if a municipality threatens to disconnect any service due to historic debt?
"Homeowners should either instruct an attorney to reply, or address a letter themselves to the municipality (preferably to the legal department) that the arrears are disputed, any disconnection will be unlawful and they will face a Spoliation Application with an appropriate costs order should they disconnect without a court order.”
He also says that it's possible to get the service reconnected before the historical debt is paid.
"If a municipality elects to disconnect, an attorney will have to be instructed to launch an urgent application to have the electricity re-connected. The courts will normally grant a punitive costs order against the municipality and so the homeowner should recover most of the legal costs.
The Municipality must exhaust all avenues against the previous owner. It is highly unlikely a court will ever order a current homeowner's property be seized for historical debt which a municipality was too shoddy to bother collecting.”
Source - Lea Jacobs - PrivateProperty
Author: Lea Jacobs - Private Property