Lesedi Local Municipality
People Centred & Performance Driven Municipality

Land Alienation

LAND ALIENATION POLICY

POLICY AND PROCEDURAL GUIDELINES ON THE ALIENATION AND ACQUISITION OF IMMOVABLE PROPERTY
Sixth Draft

INDEX

1.   PREAMBLE
2.   DEFINITIONS


ALIENATION OF PROPERTY

3.   THE PROCESS FOR ALIENATION OF IMMOVABLE PROPERTY
4.   GENERAL CONDITIONS OF ALIENATION


ACQUISITION OF PROPERTY

5.   PROCESS OF ACQUISITION OF PROPERTY
6.   CAPITAL ASSETS
7.   LEASE
8.   INVASION
9.   CLEANING
10. VOETSTOOTS
11. PRICING OF LAND
12. CONTRAVENTION OF POLICY


ANNEXURE "A"

ANNEXURE "B"

1. PREAMBLE

The intention of this Policy is to repeal the existing Policy on the alienation of Municipal–owned land. The new policy is incorporating new Mayoral Committee resolutions, streamline procedures, comply with new Municipal legislation impacting on property alienation and reduce possible delays regarding the alienation and acquisition processes with a view to achieved the following objectives:

1.1 To standardize policy procedures for the alienation and acquisition of land by the Lesedi Local Municipality;

1.2 To fast track community integration;

1.3 To provide land for affordable housing development;

1.4 To provide access to land for the promotion of socio-economic empowerment opportunities;

1.5 To ensure that market related values are charged for alienated properties towards optimum revenue collection.

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2. DEFINITIONS
In this Policy, the following words shall have the meaning ascribed hereunder unless the context indicates otherwise;

"Acquisition" Obtain ownership of or rights to immovable property in the name of the Municipality by means of sale, donation, auction, and lease.

"Alienation" Disposal of Municipal-owned immovable property by means of sale, land availability agreement, land swap, and lease.

"Cancellation" Termination of contract due to breach, affluxion of time and/or by mutual agreement where after the property and use thereof shall revert to the owner.

"Closed Bid" The open process of calling for bids on the alienation of specified immovable property from a specified group as defined by the Council from time to time.

"Commencement Date of Contract" Date of last signature of the contract by the last signing party to the agreement and/or as determined in the contract.

"Date of Sale/Acquisition" Date of last signature of the contract by the last signing party to the agreement and/or as determined in the contract.

"Development" Construction of a structure in terms of the National Building Regulations as and when plans are approved by the Municipality.

"Development Proposal" Written suggestion for rights to use/develop Municipal-owned property.

"Donation" Acquisition of immovable property at no fee.

"Expropriation" To unilaterally acquire ownership of property by taking away the ownerís rights if it is in the public interest and through a legislative process in terms of the relevant legislation.

"External Stakeholder" Any person other than an official or councillor acting in their official capacity.

"Historically Disadvantaged Individual" (HDI) means a South African citizen
  • Who, due to the apartheid policy that has been in place, had no franchise in national elections prior to the introduction of the Constitution of the Republic of South Africa, 1983 (Act 110 of 1983) or the Constitution of the Republic of South Africa, 1993 (Act 200 of 1993) (the Interim Constitution); and/or
  • Who is a female, youth; and/or
  • Who has a disability: Provided that a person, who obtained South African citizenship on or after the coming into effect of the Interim Constitution, is deemed not to be an HDI
"Immovable Capital Assets" An immovable capital asset is an asset defined herein as immovable property and as referred to in Section 14 of the MFMA.

"Immovable Property" Land and/or any improvements affixed thereto.

"Internal Stakeholder" An official or councilor acting in their official capacity.

"Land Availability Agreement" Giving rights for the use or development of land to a third party.

"Lease" An agreement by which the owner of property allows another to use it for a specified time in return for a specified amount of money.

"Legislation" Any proclaimed National or Provincial Act, By- Law, regulation, and rules of practice of all the Courts in the Republic of South Africa, policy or directive document.

"Low Income Earners" People who earn a single or joint monthly income determined from time to time by National Department of Housing.

"Market Related Value" An amount for lease/sale/purchase that parties to such a transaction agreed to be based on the valuation as determined by the Councilís Valuer. A Valuer registered in terms of the relevant legislation.

"Memorandum Of Understanding" An agreement stipulating a working relationship to implement mutual objectives between parties with regard to the sale/acquisition of land.

"Middle Income Earners" People who earn a single or joint monthly income as determined by the National Department of Housing as it may vary from time to time.

"Nominal Fee" A fee below the market value.

"Open/Public Bid" The open process of calling for bids on the alienation of specified immovable property from the public or unspecified person(s).

"Private Auction" The open process of alienating property at a specified date, time and place to the highest bidder from a specified group of persons.

"Public Open Space" Any land zoned for use by the general public as an open space, park, garden, recreation site, sport fields or square.

"Public Auction" The open process of alienating property at a specified date, time and place to the highest bidder from the public.

"Public Private Partnership" An agreement between the Council, a public entity / a private entity to establish a working relationship to implement mutual objectives in terms of the relevant legislation with regard to the sale/acquisition of land.
"Road Reserve" A portion of land reserved for Municipal services and pedestrians traffic.

"Servitude" Rights over property or a portion thereof registered against the title deed of that property.

"Valuation" The value or price of the property as determined by the registered Valuer.

"Zoning" A land use right conferred on a land entity in terms of an approved Town Planning Scheme or approved Amendment Scheme.

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ALIENATION OF PROPERTY

3. THE PROCESS FOR ALIENATION OF IMMOVABLE PROPERTY
3.1 This process of alienation of property is applicable to all immovable properties zoned as Church, Residential, Undetermined, Business etc and excluding properties zoned as Road Reserves and Parks or Public Open Space unless an exception is made by the Council on recommendation of the relevant department.

3.2 Municipal property may be alienated through any of the following methods:
  1. Sale
  2. Lease
  3. Land Availability Agreement
  4. Donation
  5. Land swop
  6. Servitude

3.3 Origination of Alienation process

Any interested party/parties or official acting in his/her official capacity may initiate the process of alienation by submitting a written application or report to the relevant department for comments in terms of the policy including a Land Availability Agreement and/or to the department responsible for properties motivating the proposed use of such property for consideration by the Council or the property may be alienated in terms of the Supply Chain Management System.


  1. Internal /External Stakeholder
    The Mayoral Committee or the external stakeholder (through the Mayoral Committee) may recommend to the Council in terms of the policy that an identified property be alienated for purposes of advancing the vision, mission and strategic objectives of Lesedi Local Municipality.
  2. Low Income Earners
    Any Low Income Earner may propose that the residential 1 property be alienated to him/her for private development without following the strict bid process for consideration and approval by the Municipal Manager within the framework of Supply Chain Management Policy. In this instance the Municipality will invite bids and publish a notice on the municipal notice boards. The determining factor will be the fact that the bidder is the Low Income Earner as defined in this policy.
    In order to consider the process for the Low Income Earners the Municipal Valuation of the said property should be considered initially.
    The Low Income Earner must occupy the property for a period of at least five years before alienation to the third party or apply to the Council for exemption.
  3. Resale by Low Income Earners
    The Low Income Earners must develop their property according to 4.1(b)for the purpose of which it was allocated and failure to comply will lead to the property reverting back to the Council.
    or
    that the Low Income Earners be obliged to pay the full valuation price as valuated by an independent Valuer.
  4. Government Bodies and Non-profit Making Organisations, Non Governmental Organisations, Community Based Organisations, etc
    The Mayoral Committee based on the motivation of the proposed development from the institutions referred to above may consider and recommend to Council that land be alienated to such an institution at Town Valuerís valuation or at the nominal fee as determined by the Council in terms of the relevant legislation. It should be a condition of the sale that the erf shall only be used for the purposes as stated in the constitution of that institution (as at date of the alienation of the Erf) and no other purposes whatsoever. The institution shall not lease or alienate the erf for any purposes other than for the purposes of non-profit or community based organisations prior to the approval of the Council failure to comply with the condition will lead to the property reverting back to the Council.
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4. GENERAL CONDITIONS OF ALIENATION

4.1 All land sold will be subject to the following conditions:
  • That the provisions of Section 79(18) of the Local Government Ordinance, 17 of 1939, and any amendments thereto or any other law pertaining to land in general and Council-owned land in particular, be complied with.
  • Development within a period of twenty four (24) months from date of transfer, with a written extension of one year as approved by the Municipal Manager. Failure to develop will result in a cancellation of the contract at the original selling price, less any outstanding monies.


  • An extension of more than twenty four (24) months may be granted by the Council on merit subject to the disclosure of reasons for the extension.


  • Any advertisement or media publication for the alienation of land should be accompanied by the declaration of the Preferential Procurement Policy Framework Act, no 5/2000.


  • In the event where more than one application for the alienation of Council land is received and such application has been made by any Historically Disadvantaged Individual (HDI) (such person as contemplated in the Preferential Procurement Policy Framework Act, No 5/2000), the application of such Historically Disadvantaged Individual shall, provided the application complies in every respect with the Councilís policy and/or guidelines and/or requirements relating to bids and/or deeds of sale, enjoy preferential consideration on the same point scoring basis for HDIís as contained in (f) below, and/or regulations promulgated in terms of section 5 of the Act.
  • The 80/20 preference system (from R0-00 – R500 000-00)
    1. A maximum of 20 points must be awarded to a bid for any HDI and/or sub contracting with an HDI and/or achieving any of the specified goals stipulated in regulation 17 (of the Preferential Procurement Regulation 2001) and in terms of the Council Procurement Policy.
      The 90/10 preference system (from R500 000-00 – more)
    2. A maximum of ten points must be awarded to a bid for being and HDI and/or sub contracting with an HDI and/or achieving any of the specified goals in terms of the Councilís Procurement Policy.
    3. The local HDI will be allocated extra points in terms of Procurement Policy.
  • All bid documents are to contain a clause stating that it is an express term of the bid that such bids will only be regarded as valid and binding on the parties once a Deed of Sale, has been duly signed by the bidder and the Council.


  • The Deed of Sale will only be signed on payment of 100% (or upon the delivery of an acceptable guarantees) within (7) seven days after the award by the Bid Adjudication Committee or the Council.


  • All development subject to land use right, shall be applicable in terms of Policy and relevant legislation.


  • Farm portions are further subject to the following if it is in terms of the Township Establishment or incorporation.


  • Township Establishment or incorporation into the boundaries of an existing township, subject to:
    1. Environmental Impact Assessment on the portion of land.
    2. A geo-technical soil survey.
    3. Confirmation of the availability of sufficient municipal services infrastructure for the intended development on the property.
    4. Bulk and internal services will be payable by the owner of the property.
  • All other properties that are not farm portions are further subject to the following:
    1. Where the intended use on a purchased property deviates and is in contradiction to the existing zoning of such an erf, an appropriate establishment, subdivision, consolidation, building line relaxation, rezoning etc. has to be submitted by the applicant at his own cost, for consideration of the application by the Municipality.
    2. Where the proposed land use is in contradiction with the conditions of Title of a property, the purchaser at his costs must do the application for the removal of restrictive title conditions.
    3. The alienation of land should be in line with the Councilís policy and relevant legislation.
    4. Bulk services will be payable by the owner of the property.
  • All applications for a change in land use rights, subdivision and township establishment the applicant will be subjected to and responsible to enter into a service agreement with the Municipality and the cost for the upgrading of infrastructure resulting from such an application will be for the cost of the applicant. For all developments the provision of internal engineering services will be to the account of the purchaser.


  • All proposed development of building work would be subjected to the submission and approval of building plans at the cost of the purchaser.


  • All proposed land would be required to submit a Site development Plan to the Municipality for approval.


  • All applicants who are not natural persons must attach their company profile indicating equity ownership, management and a valid VAT registration certificate subject to relevant legislation.


  • All accepted bid must be finalised, including entering into Deed of Sale within ten (10) working days of the Municipality resolving and advising the bidders of same.


  • All property alienation will be subject to all applicable Legislation, Municipal Policies and By-laws.
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ACQUISITION OF PROPERTY
5. THE PROCESS OF ACQUISITION OF PROPERTY

5.1 The Municipality may acquire property from third parties in line with the Vision of Lesedi Local Municipality through:
  1. Outright Purchase
  2. Expropriation
  3. Lease
  4. Land Availability Agreement
  5. Donation
  6. Servitude

5.2 Origination of Acquisition process
Any Department may initiate the process of acquisition by submitting a report motivating the proposed use of such property for consideration by the Council of Lesedi Local Municipality.

Any owner of property may donate his/her land back to the Municipality for any purpose whatsoever subject to the approval by the Council.

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6. CAPITAL ASSETS
The provisions of Section 14 of the Municipal Finance Management Act shall apply to the disposal of all property defined as Capital assets.

7. LEASE

If the Lessee decides to cancel the consumer agreement before the termination date he/she shall forfeit the 1 (One) month deposit that he/she paid in terms of the policy.

8. INVASION

The purchaser shall prevent the illegal invasion of his/her property the property.

9. CLEANING

The purchaser shall clean and take care of the property and should she/he fail to do so the Municipality shall undertake to clean the property at the cost of the owner. The amount shall be levied to the account of the owner.

10."VOETSTOOTS"

The municipality shall sell the property "voetstoots" subject to different application for land use.

11. PRICING OF LAND

All land shall be sold subject to the price as recommended by an Municipal Valuer which will be based on current competitive market unless decided otherwise by the Council.

12. CONTRAVENTION OF POLICY

A person who has contravened the provisions as stipulated in the policy may be held liable for damages and actions may be taken in terms thereof.

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ANNEXURE "A"
Process of Alienation
  1. Acknowledgement receipt of an application, advice of time frames to stakeholder within ten (10) working days of date of receipt.
  2. Compiling a draft report timeously together with application received in terms of the provisions outlined in 3.2 above for circulation.
  3. Consolidate comments, finalise draft report and recommendations and table the final report before the relevant committee(s) for consideration and/or approval.
  4. Advise applicant of the resolutions of the committee(s) and ensure compliance.
  5. Implement the Bid Committee resolution which can be in one of the following ways:
  6. Sale
Sell as resolved and/or recommended.
    1. (Finalisation of Deed of Sale incorporating conditions of approval.
    2. Call the purchaser to pay all necessary fees and/or purchase price and sign the Deed of Sale.
    3. Forward the Deed of Sale to Municipal Manager for signature.
    4. Distribute signed copy of Deed of Sale to all relevant departments, the applicant and the transferring Attorneys and levying of rates and opening of accounts.
    5. Signing and issuing of all transfer documents relating to the transfer of the property (Power of Attorney, Consent by Seller, Clearance Certificates, TAX /VAT document).
    6. Removal of the property from the asset register after registration.
Sell the property by means of Public or Private Bid process as resolved and/or recommended.
  • PRIVATE BID
      1. Send Notice of Bid to applicants to bid for property as resolved.
      2. Prepare a Bid Document.
      3. Opening and reading of Bids.
      4. Adjudicating of Bids and formulating a report for Bid Committee consideration.
      5. Then the provisions under 1.5.1 (a)(i) - (vi) shall apply.
    • BID PROCESS
      1. Publish a notice calling for bids and objections.
      2. Prepare a Bid Document.
      3. Brief prospective bidders if required in terms of (i) above.
      4. Then the provisions under 1.5.1 (a)(i) – (vi) shall apply.
    • AUCTION
      1. Sell the property by means of a Public or Private Auction as resolved and/or recommended by the Mayoral Committee.
    • PRIVATE AUCTION
      1. Send a Notice calling all the applicants to attend a Private Auction at a specific time and venue to verbally bid for the property.
      2. Then the provisions under 1.5.1 (a)(i) – (vi) shall apply.
    • PUBLIC AUCTION
      1. Publish a Notice calling all interested parties to attend the Public Auction at a specified time and venue.
      2. Then the provisions under 1.5.1 (a)(i) – (vi) shall apply.
    • PROPERTY DEVELOPMENT PROPOSALS
      Call for proposals for the development of a property as resolved and/or recommended by the Council.
      1. Sent notice calling for all interested parties to submit development proposals.
      2. Provisions of the Bid Process shall apply.
      3. The properties referred to under (a), (b), (c) and (d) above shall exclude land zoned/referred to as a "Parks/Public Open Spaces" unless a resolution specifically authorises the alienation of such property.
    LEASE
    • Lease property for specific period as determined by the Council.
      1. Prepare Lease Agreement incorporating conditions of approval and circulate the draft for comments by the relevant departments.
      2. Call the Lessee to come and pay the necessary payment and sign the Lease Agreement.
      3. Forward the Lease Agreement for signature to the Municipal Manager.
      4. Distribute signed Lease Agreement to all relevant departments and the Lessee, for levying of rates, opening relevant accounts and contract management respectively.
      5. Ensure compliance with all the relevant legislations.
    • Notarial leases for a period 10 (ten) years and above.
      1. Publish a Notice for objection in the Newspapers in terms of applicable legislation.
      2. Ensure compliance with all the relevant legislations.
      3. Call the lessee to sign the Deed of Lease.
      4. Forward the Lease Agreement for signature to the Municipal Manager.
      5. Attend to signing all the documents regarding the Notarial registration of the Lease Agreement.

    The lease of property referred to under 1.5.2 (a) and 1.5.2 (b) above shall exclude properties zoned/referred to as "Road Reserves", "Parks/Public Open Space" unless a resolution specifically authorises the lease of such property.

    • Land Availability Agreement
      1. The applicant submits a written application to the Municipality requesting the Municipality to avail land for development.
      2. Circulate a draft report together with the application to the relevant departments for comments.
      3. Request the valuation when applicable at the cost of the applicant.
      4. Prepare a final report incorporating comments and tabling same before the Council for consideration and approval.
      5. Advising the applicant of the resolution of the Council.
      6. Publishing a Notice of the Municipalityís intention to avail land for objections in terms of relevant legislation.
      7. If there are objections, the relevant legislation should apply.
      8. If there are no objections then finalise the Land Availability Agreement incorporating conditions as resolved by the Council.
      9. Call the applicant to come and pay the necessary payment and sign the Land Availability Agreement.
      10. Forward the Land Availability Agreement to the Municipal Manager for signature.
      11. Distribute signed Land Availability Agreement to all relevant departments and the applicant for levying of rates, opening relevant accounts and contract management.
    • Rebate
      1. The Council may resolve to grant a rebate on the sale of property to encourage land sales, speed development or to reward investors as and when required.
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    ANNEXURE "B"
    Process of Acquisition

    1.1 Receive a proposal from an Internal / External Stakeholder.

    1.2 Compiling a draft report together with the proposal received in terms of the provision outlined under 5.1 for circulation.

    1.3 Consolidate comments, finalise draft report and recommendations and table the final report before the Council for consideration and/or approval.

    1.4 Advised relevant Departments/External Stakeholder of the resolutions of the Council and ensure compliance.

    1.5 Implement the Council's resolution which can be in one of the following ways:
    1.5.1 Outright Purchase
    • Outright Purchase by Public Auction
      1. The Municipal Manager or other nominated Council representatives to attend an Auction with all pre-auction requirements.
      2. Comply with post-auction conditions including payment and signing of purchase agreement.
      3. Obtain confirmation of registration and/or Title Deed from the Sellerís Attorneys.
      4. Record property in the register as well as asset registered the safekeeping of the Title Deeds.
    1.5.2 Expropriation
    • A Council may resolve to expropriate privately owned property in accordance with existing legislation for the implementation of any of its IDP projects if it is in the public interest to do so and where the owner is not consenting to the acquisition in accordance with existing legislation.
    • Process of expropriation:
      1. Table a report to the Council for a resolution to expropriate a specific property in terms of the relevant legislation.
      2. Obtain a market value of the property from an Municipal/Independent Valuer.
      3. Notify the property owner of the Councilís intention to expropriate.
      4. Instruct attorneys to carry out the legislative process to effect b (i) above if applicable.
      5. Compensate property owner in accordance with the Court Order.
      6. Appoint attorneys to attend to the transfer of property to the Municipality if applicable.
      7. Record property in the asset register of the Municipality after registration.
    1.5.3 Lease
    • The municipality may resolve to lease property from a third party for use to achieve any of its operational or IDP programmes, for a period as determined by the Council.
      1. Approval for a Lease by Council.
      2. Publish notice calling for proposals for suitable property to be leased according to specifications.
      3. Adjudicate and table a report for approval.
      4. Cause parties to sign Lease agreement.
      5. Call the Lessor to sign the Deed of Lease.
      6. Distribute signed Lease Agreement to relevant departments and the Lessor, for compliance including contract management.
    1.5.4 Land Availability Agreement
      1. The applicant submits a written application to the Municipality requesting the Municipality to avail land for development.
      2. Circulate a draft report together with the application to the relevant departments for comments.
      3. Prepare a final report incorporating comments and tabling same before the Council for consideration and approval.
      4. Advising the applicant of the resolution of the Council.
      5. Publishing a Notice of intention to avail land for objections at the cost of the applicant.
      6. If there are no objections then finalise the Land Availability Agreement incorporating conditions as resolved.
      7. If there is an objection, the relevant legislation should apply.
      8. Call the applicant to come and pay the necessary payment and sign the Land Availability Agreement.
      9. Forward the Land Availability Agreement to the Municipal Manager for signature.
      10. Distribute signed Land Availability Agreement to all relevant departments and the applicant for levying of rates, opening relevant accounts and contract management.
    1.5.5 Donation

    The Municipality may accept donated property from External Stakeholders, subject to the consideration of its suitability and use and the future implications of such acceptance of the donation to the budget in terms of the Municipal Finance Management Act, Environmental and any other applicable legislation and conditions.
      1. Approval of a donation by Council.
      2. Publish notice calling for objections.
      3. Cause parties to sign a Deed of Donation
      4. Call the donor to sign the Deed of Donation.
      5. Distribute signed Deed of Donation to relevant departments and the donor, for compliance including contract management.
    1.5.6 Servitude

    The Municipality may resolve to register a Servitude against a Title Deed of a property of a third party if such a right is required to provide an essential service subject to the following procedure:
      1. Prepare a report for the Council in order to comply with all relevant legislation (including the appointment of the Land Surveyor).
      2. Finalise conditions as per resolution including but not limited to valuation.
      3. Finalisation of Deed of Servitude incorporating conditions of approval.
      4. Signing of Deed of Servitude by the Municipality and the third party.
      5. Process requisition for payment of purchase price in terms of the agreement.
      6. Obtain confirmation of registration and/or title deed/deed of servitude from the Attorneys.
  • Record servitude in the register book.
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