Municipal planning by-laws come with provincial and national restrictions

Gert Minnaar, practising conveyancer at the Illovo branch of STBB Attorneys and serving SAARDA committee member

This signed sale agreement is handed to a conveyancer with an instruction to transfer the property into the name of the purchaser.

The conveyancer is responsible to draft all the required conveyancing documents, collect or secure the purchase price, obtain a transfer duty receipt from the Receiver of Revenue, or transfer duty exemption certificate if it is a Vatable transaction, as well as a rates clearance certificate for the property from the municipality.

The following documents are lodged at the Deeds Office for such transfer to be registered:

• the current title deed for the property, or a reference to where it is filed,
• the new Deed of Transfer showing the purchaser as the new registered owner,
• the transfer duty receipt and
• a rates clearance certificate for the property.

The transfer duty receipt

Transfer duty is a tax levied on the value of any property acquired by any person by way of a transaction or in any other way.

The purchaser makes payment thereof to the conveyancer, within 6 months from date of acquisition of the property, who will then pay it over to the Receiver of Revenue, together with the prescribed documentation which will include a copy of the sale agreement.  The Receiver of Revenue then issues the transfer duty certificate to the conveyancer for submission to the Deeds Office.

Section 12(1) of the Transfer Duty Act, 1940 (No 44 of 1940) imposes a duty on the Registrar of Deeds in respect of an acquisition of property to obtain proof that any duty payable under this Act or any other law has been paid in respect of the acquisition in question.

The rates clearance certificate for the property

The municipality is entitled to collect two different forms of payments from a property owner, the first one being rates and taxes which the municipality uses to fund its operations and the second for the services the property owner receives from the municipality in the form of water, electricity, sewerage services and refuse removal.

The conveyancer applies for rates clearance figures for the property, makes payment of the requested amount on behalf of the seller and the municipality issues the rates clearance certificate which is valid for 60 days from the date on which it was issued.

Section 118(1) of the Local Government: Municipal Systems Act, 2000 (No 32 of 2000) restrains the Registrar of Deeds from registering the transfer of property except on production of a prescribed certificate, issued by the municipality in which the property is situated, which certifies that all amounts that became due in respect of that property during the two years preceding the date of application for the certificate have been fully paid.

The introduction by certain municipalities in the Mpumalanga Province of a SPLUMA certificate for submission to the Deeds Office

In the Mpumalanga Province in 2016 some municipalities promulgated municipal planning by-laws in terms of the Spatial Planning and Land Use Management Act, 2013 (No 16 of 2013) which suddenly required of the conveyancers to obtain an additional certificate from the municipality for submission to the Registrar of Deeds at Nelspruit.

This placed a restraint on transfer of properties at the Nelspruit Deeds Office if the municipality did not issue a certificate certifying that all spatial planning, land use management and building regulation conditions or approvals in connection with that property had been obtained and complied with the requirements of the by-law.

This so-called SPLUMA certificate caused consternation because it understandably resulted in a delay with the transfer of properties with extra paperwork to require and lodge at the Deeds Office.

The response of the Registrar of Deeds at Nelspruit to this new requirement

It seems that the Registrar of Deeds at Nelspruit had no misgivings about this additional certificate announced by these municipalities.

Registrar’s Circular 3 of 2016 issued on 4 March 2016 stated that the Registrar of Deeds has the responsibility to ensure compliance with the Mbombela By-law on Spatial Planning and Land Use and that the Registrar of Deeds must insist upon such certificates for all properties that fall in the jurisdiction area of the municipality.

The responsibilities of the examiners in this regard were spelt out as follows:

This stringent directive came in operation on 1 May 2016 and all transfers lodged from that date at the Deeds Office in Nelspruit had to be accompanied by this new SPLUMA certificate.

The reaction to this extra paperwork

This new arrangement was met with opposition by the conveyancing fraternity but sadly not enough to stop it in its tracks.

When the Govan Mbeki Municipality in Secunda, the Emalahleni Local Municipality at eMalahleni (Witbank) and the Steve Tshwete Local Municipality at Middelburg imposed municipal planning by-laws with similar restrictions on the transfer of property they met with stiffer opposition.

A number of mining companies that intended to give transfer and take transfer of immovable properties situated in the jurisdiction areas of these municipalities approached the High Court for orders to declare the specific sections of those by-laws constitutionally not valid.

Apart from the relief sought against the municipalities the High Court was also asked to review and set aside the decision by the Registrar of Deeds for Mpumalanga in Nelspruit to give effect to the by-laws and direct the Registrar of Deeds to receive and process applications for registration of the mines’ properties without having to produce these SPLUMA certificates.

The High Court gave judgment in January 2021 and found the by-laws unconstitutional and invalid on the basis that they constituted an arbitrary deprivation of property as envisaged in Section 25(1) of the Constitution of the Republic of South Africa.  It also held that the by-laws were not authorised by Section 156 read with Part B of Schedule 4 of the Constitution and it conflicted with Section 118 of the Local Government: Municipal Systems Act, 2000 (No 32 of 2000).

The Supreme Court of Appeal has its say on the matter

The officials at the Govan Mbeki Municipality and Emalahleni Local Municipality were not satisfied with this outcome and decided to take the matter further.

The Supreme Court of Appeal found in Govan Mbeki Local Municipality and Another v Glencore Operations South Africa (Pty) Ltd and Others (334/2021 and 338/2021) [2022] ZASCA 93 (17 June 2021) that the Constitution requires co-operative government between national, provincial, and municipal legislation as captured Section 40 of the Constitution.

This principle is effectively implemented through the framework legislation of national and provincial government. Accordingly, where framework legislation at the national and provincial has been promulgated, particularly where there is necessary overlap between the spheres of government due to the nature of the subject-matter to which the legislation pertains, it is necessary for municipal law to be exercised within this scope.

The Spatial Planning and Land Use Management Act, 2013 (No 16 of 2013) is the framework legislation that authorises the making of by-laws.  This Act lays down the limits within which the municipalities may legislate and does not give the municipalities freedom to make any policy decisions they choose.

Furthermore, the registration of the transfer of property is regulated by the Deeds Registries Act, 1937 (No 47 of 1937), the Sectional Titles Act, 1986 (No 95 of 1986), the Transfer Duty Act, 1940 (No 44 of 1940) and the Local Government: Municipal Systems Act, 2000 (No 32 of 2000) which are all pieces of national legislation too.

Conclusion

Municipalities are not allowed to regulate the statutory power of the Registrar of Deeds to register the transfer of properties because this exceeds its competency to legislate.

The enforcement of land use management must be done by the municipalities in terms of the framework for enforcement of by-laws described in Sections 32(2) to 32(12) in the Spatial Planning and Land Use Management Act which requires of municipal inspectors to determine if there is non-compliance of the land use scheme.

The provisions of these by-laws which added an additional duty to the Registrar of Deeds to call for a SPLUMA certificate before a transfer could be registered intended to amend Section 118 of Local Government: Municipal Systems Act.  This also exceeded the legislative powers of the municipalities.

This means that it is not necessary to lodge a SPLUMA certificate as required in terms of a municipal planning by-law at the Deeds Office with the transfer of a property.

However, the Registrar of Deeds at Nelspruit in Mpumalanga issued a notice on 12 July stating that as the Emalahleni Local Municipality has applied on 8 July 2022 to the Constitutional Court (CCT191/22) for leave to appeal the judgment and order by the Supreme Court of Appeal in the matter between Govan Mbeki Local Municipality & 1 Other v Glencore Operations South Africa (Pty)Ltd & 4 others- Case No.334/2021 & Case No.338/2021 which was handed down on the 17 June 2022. In light of this that Deeds Office will now continue to implement the sections of the Municipal By-laws on Spatial Planning and Land Use Management of all municipalities in the Mpumalanga Province with immediate effect.  The reason for this being that the effect of the appeal is that the judgement and the order in the above case is suspended.