Playing our part in the ConCourt case on Section 118(3)

The ruling that new home owners are not liable for historical debt

Historically the applicants in this matter were various consumers from a number of municipalities.  They had been refused the supply of services to their properties, or had had the services to properties terminated, on the basis that they refused to pay the municipalities concerned any amounts incurred by the prior owners of these properties.

TUHF was one of the “other parties” that intervened in the matter in the Constitutional Court. 

TUHF Ltd (“TUHF”) was admitted by the Court as the first amicus (friend of the court).  TUHF made novel submissions to the Court explaining how (in its view) it was not necessary to deal with the constitutionality of section 118(3) if it was properly understood and interpreted in light of its historical common law treatment.  BASA (the Banking Association of South Africa) was admitted as the second amicus.

TUHF’s main argument was that the common law requires that a creditor (i.e. the municipality) can only acquire limited real rights in the property of another (even for security purposes) as envisaged in section 118(3), if some form of publication of those rights occurs, to notify the public at large (and other creditors) of the fact that the property stands as security for someone else’s claim against the owner thereof.

The metropolitan municipalities of Tshwane and Ekurhuleni have been ordered by the Constitutional Court to cease the widespread practice of making new homeowners liable for historical debt of former owners. New owners now have no connection to a seller’s municipal debt (including water, electricity, rates and taxes charges).

“Over the years, our clients have come to rely on TUHF for more than just funding – we provide support in all areas that affect our clients. We continue to make a concerted and collective effort to develop our industry providing support, guidance and risk management,” says Paul Jackson, TUHF CEO.