Otavi shot in foot by age-old contracts

THE Otavi Village Council will auction over 80 plots next week, but may only gain about N$300 000 to N$400 000 instead of the full value of the plots – a possible N$3,2 million.

This is because initial contracts signed with the owners many years ago never contained a reversionary clause, which stipulates that ownership of the land will revert back to the Council if it is not developed within a specified time.All the erven on auction are ‘unimproved land’, meaning no buildings or services have been set up, in some cases for up to 30 years.The reason the plots are being auctioned is not because of their ‘unimproved’ state, but because of the rates and taxes owed by the landowners. In order to retrieve this money, the Council has served the landowners with a notice of sale in execution, meaning the land will be auctioned off if they fail to pay the money owed to the Village Council before the auction.But the Council will only get what’s owed to it in rates and taxes, and not a penny more, because the land is still owned by the owner, and not by the council, as would’ve been the case with a reversionary clause.This means that if the rates and taxes owed to the council stand at N$5 000, including the legal fee to the municipality’s representative, and the land is sold at the auction for N$40 000, the Council only gets what is due to it, and the landowner receives the N$35 000 difference.According to Dirk Conradie of Conradie & Damaseb Attorneys, a few of the landowners – some of whom live in Germany or South Africa – have responded to the notice by paying their outstanding rates and taxes. For some, as in the case of a certain landowner with four erven, this simply meant paying the rates and taxes ranging between N$5 000 and N$8 000, and selling the land at N$40 000 per erf to someone else.Otavi recently became home to one of Namibia’s biggest development initiatives – the Ohorongo Cement Factory – and the land in question seems to be quite popular, with Conradie & Damaseb having received several calls from keen buyers who saw the notices of sale in various newspapers.One such potential buyer has expressed interest in 50 of the sizeable plots, in order to develop a shopping mall at the town. In another instance a Minister expressed interest in securing four plots and asked to have them reserved.Both were turned down by Conradie & Damaseb, who said that the land can only be sold at the auction and not reserved.A representative of the firm will be present at the auction to ensure that all the plots for sale are sold individually and not in groups.’The municipality is in an unfortunate position because without the reversionary clause, the land still belongs to other people, and not to the council. So if people come and settle their accounts, they still own their land,’ says Conradie.Such a clause will not even be included in the new sale agreements at the auction, he says, because the municipality is only acting on behalf of the landowners to get its money, and is not selling its own erven.So even if the land is sold at auction, it could remain unimproved for many more years to come without the municipality having a say in this regard.The municipality could potentially buy back some of the land to resell at a higher price (and with the inclusion of the clause), but it will have to compete against the other bidders at the auction. ‘Developers and people with millions of dollars will be at the auction. They have the type of money that the municipality doesn’t have. In some cases, people might just buy back their own land, because the only loss they really make is the rates and taxes and the legal fees which they will owe to the municipality.’But the municipality might get its own back yet, says Conradie.’The municipality needs to do a revaluation of the land, and score on rates and taxes, because this is where it would get its money in any case. By adjusting these rates and taxes, many of which have not been adjusted for a long time, it would get a more appropriate value in rates for the land in the area. So it might lose now, but it could gain later through rates and taxes.’nangula@namibian.com.na