Rates clearance and occupational rent estimator

Two payments catch sellers and buyers out between signing a sale and registration in the deeds office. The first is the rates clearance: before the transfer can be registered, the municipality must certify that the property's account is paid up, and to get that certificate the seller pays not only any arrears but an advance covering months that have not happened yet. The second is occupational rent: when one party moves in before registration or the other stays on after it, the party in occupation pays the other for the privilege, pro rata by the day, at whatever rate the agreement sets. This estimator works out both so that neither arrives as a surprise.

It is for sellers budgeting for the conveyancer's request for clearance figures, for buyers who want to move in early and need to know what that costs, and for both parties when registration is delayed and the occupational rent clock keeps running.

What this calculator works out and who it is for

You enter the monthly rates and municipal services on the property, any arrears owed, the number of months in advance the municipality requires, the occupation date, the expected registration date, and the occupational rent per month in the agreement. The estimator returns the advance, the total clearance figures, the validity period of the certificate for lodgement, the number of days between occupation and registration, which direction the occupational rent flows, and the pro-rata amount.

It warns when the agreement sets no occupational rent, when arrears older than two years appear on the figures, when an advance of more than six months is being demanded, and that the unused advance is recoverable once the buyer's account opens.

How the calculation works

The clearance figures are arrears plus advance. The advance is the monthly rates and services multiplied by the number of months the municipality requires, which is an input because the practice varies: three to six months is common, some municipalities ask for less, a few for more. The estimator defaults to four. The total is what the seller pays, through the conveyancer, to get the certificate.

The occupational rent calculation starts from the two dates. If occupation is before registration, the buyer is in the property before owning it and pays the seller. If the seller stays after registration, the seller pays the buyer. The estimator counts the days between the dates, converts the monthly occupational rent to a daily rate by dividing by the average month of 365 over 12 days, and multiplies. Occupational rent is a contractual figure, so if the agreement is silent the estimator reports that none is owed and warns about the gap.

The law behind the numbers

Section 118(1) of the Local Government: Municipal Systems Act 32 of 2000 provides that a registrar of deeds may not register the transfer of property except on production of a prescribed certificate issued by the municipality in which the property is situated, certifying that all amounts that became due in connection with that property for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties during the two years preceding the date of application for the certificate have been fully paid. The two years is the limit of the embargo: the municipality cannot withhold the certificate for older debt. Section 118(3) separately gives the municipality a charge on the property for all amounts due, including older ones, which it can pursue by other means, and the Constitutional Court has held that charge does not survive transfer to a new owner.

The municipality issues "clearance figures" setting out what must be paid for the certificate to issue. Because the certificate must still be valid when the transfer is lodged, and because the municipality's account for the seller will run until registration, the figures include an estimate of charges for a period in advance. The Supreme Court of Appeal held in Nelson Mandela Bay Municipality v Amber Mountain Investments 3 in 2017 that a municipality may not refuse the certificate because a seller declines to pay amounts that are not yet due; the practice of asking for several months in advance continues on the basis that the certificate covers the period to registration, and the amount is a matter for the conveyancer to negotiate where it is excessive. The Chief Registrar of Deeds limits the period for which a rates clearance certificate may be used to lodge a transfer to 60 days from issue, whatever validity the municipality states, so a delayed transfer needs fresh figures and a fresh certificate.

Once the transfer is registered, the municipality closes the seller's account and opens one for the buyer. The seller's advance is credited to the seller's account and refunded on application, or the conveyancer apportions it between the parties in the final statement of account. The guide to rates clearance certificates deals with the process and the municipal delays that go with it. Sectional title units need a levy clearance from the body corporate as well.

Occupational rent is not regulated by statute. It is a term of the sale agreement, under which the party in occupation of a property they do not own pays the other party an agreed amount, usually monthly and pro rata, from the occupation date until registration or from registration until vacating. It compensates the owner for the use of their asset and usually covers the rates and consumption charges for the period. It is not rent under the Rental Housing Act, and the Rental Housing Tribunal has no jurisdiction over it. Standard agreements set it at a market-related monthly figure or a percentage of the purchase price a year. If the agreement is silent, the party in occupation owes nothing, however long the delay, which is why the estimator's warning on that point matters. The guide to occupational rent and occupation date covers the terms in detail.

Risk and benefit in the property pass on the date the agreement states, usually the occupation date. From that date the occupant is responsible for the property and should insure it, and the owner's bond and rates obligations continue until registration.

Worked example

Pieter is selling his house for R2 400 000. Rates and services run at R2 500 a month and he is R3 000 in arrears. The buyer, Anele, wants to move in on 1 November 2026; the conveyancer expects registration around 15 December. The agreement sets occupational rent at R12 000 a month.

The conveyancer applies for clearance figures and the municipality asks for four months in advance, R10 000, plus the arrears. Pieter pays R13 000 to get the certificate, which must be used to lodge within 60 days. Anele occupies on 1 November, 44 days before registration, and pays occupational rent for those days: R12 000 a month is R394.52 a day on the 365-over-12 basis, which comes to R17 358.90, payable to Pieter and usually collected by the conveyancer from the purchase price or paid monthly. On registration the municipality opens Anele's account; Pieter's unused advance, roughly three and a half months, is refunded to him or apportioned.

Had the agreement said nothing about occupational rent, Anele would have lived in Pieter's house for 44 days for nothing, and if registration had slipped to March she would have done so for four months. Had Pieter stayed on after registration to finish his own move, the flow would reverse and he would pay Anele.

What the calculator does not include

It does not know your municipality's actual practice on advances, or whether it will dispute the account. Johannesburg, Cape Town, Tshwane and the smaller municipalities differ, and a disputed account can stall the certificate for months.

It does not calculate the levy clearance for a sectional title unit, the homeowners' association consent in an estate, or the certificate fees the municipality charges for issuing the figures and the certificate.

It does not apportion rates and consumption between the parties for the occupation period, which depends on the agreement; most agreements make the occupant liable for consumption from occupation.

It does not calculate the interest on the purchase price that some agreements provide for where the buyer causes delay, which is separate from occupational rent.

It does not deal with VAT on occupational rent, which can arise where the seller is a VAT vendor.

When to get advice

The conveyancer handles the clearance application and will tell you the figures; ask them to check the age of each arrear item against the two-year limit and to push back on an advance beyond what the municipality's own policy requires. Agree the occupational rent before anyone moves in, in writing, in the sale agreement or an addendum, with the date it starts and what it covers. Get advice if the municipality refuses to issue figures because of a dispute, if the figures include debt you say is not yours, if the buyer in occupation stops paying occupational rent, or if the seller in occupation after registration will not leave; the last of those is an eviction, not a rent dispute.

Frequently asked questions

What is a rates clearance certificate? A certificate from the municipality under section 118 of the Municipal Systems Act confirming that rates and municipal charges for the two years before the application are paid. The deeds office will not register a transfer without it.

Why do I have to pay rates in advance to get it? The certificate must still be valid at registration, so municipalities include an estimate for the months to registration in the clearance figures, commonly three to six. The unused portion is refunded or apportioned after registration.

Can the municipality refuse the certificate for old debt? Not for debt older than two years before the application. It can pursue that debt separately but cannot block the transfer with it.

How long is the certificate valid? The deeds office accepts it for lodgement for 60 days from issue. If the transfer is delayed beyond that, the conveyancer needs fresh figures.

Who pays occupational rent? Whoever occupies the property without owning it: the buyer who moves in before registration pays the seller; the seller who stays after registration pays the buyer. The amount is whatever the agreement says, pro rata by the day.

What if the agreement does not mention occupational rent? Then none is owed, however long the delay. Agree it in writing before occupation.

Does occupational rent cover rates and electricity? Usually the agreement makes the occupant responsible for consumption from the occupation date and the occupational rent covers the use of the property; check the clause.