In the recent case of Real People Housing v City of Johannesburg,
the South Gauteng High Court confirmed that a landowner has a statutory liability to pay ALL municipal charges related to his property. The existence of a so-called “consumer agreement” between a landowner and the municipality is not required. The responsibility of the owner to pay for services relating to his property arises from the mere ownership of the property - this is so because all risks in respect of the property, all benefits and liabilities attached to the property, are borne by the owner as soon as he takes ownership. In the present matter the owner let out his premises to a tenant, who concluded a consumer agreement with the municipality for the delivery of water and electrical services. The account fell into arrears and by the time summons was issued the outstanding amount was approximately R106 000.00. When the municipality issued summons against the owner, the owner tried to rely on the fact that he had not concluded a consumer agreement with the municipality, but indeed that the tenant had done so.The High Court correctly pointed out that it was not necessary for the existence of a consumer agreement between the municipality and the owner. In terms of municipal bylaws and ordinances an owner is liable for all charges in respect of water and electricity to his property, whether he personally uses these services or not. Fortunately these ordinances also provide the owner with the right of recourse against the tenant of his property in respect of the consumption of such services.Although a joint liability therefore exists, it is highly probable that a municipality will rather pursue the owner for payment of such outstanding amounts, as the owner has assets in the form of the property which can be attached.It is also important to bear in mind that the law greatly favours municipalities in that a municipality will always have a preferent claim in respect of any monies due to it, in respect of services rendered to a property.The protection which is afforded to municipalities is so great that even a bondholder who has a bond over a property will rank second to a municipality. The powers of the municipality extend even further in that no properties can be transferred without the issuing of a clearance certificate in respect of such property, indicating that all the outstanding municipal accounts for the last two years have been fully paid. The advice which we can give to you as property owners, is to: ensure that you incorporate a clause into your lease agreement in terms of which the tenant is held liable for the municipal account (but remember that this is not a defence against the municipality – it will only assist you when you take action against your tenant) make regular enquiries at the municipality as to whether the tenant’s accounts are up to date, and if not to immediately act upon it.
