Rate defaulters may kiss their property goodbye

Harold Ayodo

Some investors in real estate play hide-and-seek with local authorities over payment of land rates.

The property owners often ignore letters from municipalities reminding them to pay up the annual duty. They even ignore notices published in the media in partial waiver of interest on land rates. The last waiver this year ended on November 19.

Peter Mwangi in Nairobi sent an email enquiring about the repercussions of defaulting on land rates.

Mwangi says he has ignored incessant reminders from the City Council of Nairobi to pay up as he intends to sell the house in South C.

According to him, the debts would be passed to the buyer, arguing the new owner may apply to City Hall for a waiver.

"Services offered by the City Council of Nairobi are way below par and paying land rates does not add up," Mwangi wrote.

Land rates are annual levies paid to local authorities by property owners as provided in the Valuation for Rating Act.

　

However, schools, hospitals, churches, morgues, cemeteries, national and game parks and charitable institutions are exempted from the duty.

Civic bodies use the annual tariffs as part of their revenue collections towards improving services within their jurisdictions.

The last time I paid a courtesy call to the City Council of Nairobi’s acting chief accountant in charge of rates Peter Muriithi, defaulters on rates were mind-boggling.

Muriithi said more than 60 per cent of property owners within Nairobi owed City Hall rates running into millions of shillings.

Back to Mwangi, selling his property would be impossible before paying up the rates he owes City Hall. He must be issued with a land rates clearance certificate before he transfers the house to the buyer.

Defaulters on land rates may kiss their property goodbye should local authorities decide to crack the whip. Their cherished land and houses would be attached and auctioned after municipalities obtain court orders.

According to Muriithi, they have repeatedly published names of defaulters in the print media without success of full payment.

Muriithi says the affected defaulters include senior officials in Government, prominent business personalities and land buying companies.

Others are banks, mortgage firms and financiers that extended loans to property owners without confirming whether rates were paid on property issued as security.

There are also people or companies that buy land without following legal procedures and fail to confirm whether sellers settled the rates before transferring property to them.

Failure to obtain a land rates clearance certificate from local authorities means the buyer inherits the accrued debt from the previous owner.

Furthermore, the local authority charges interest penalties of at least three per cent and deny defaulters waivers.

The writer is an advocate of the High Court of Kenya.