It is often said that the landlord renting out residential property should never go the DIY route in selecting and managing his tenants. This, says Jacqui Savage, the Rawson Property Group’s National Business Development Manager for Rawson Rentals, is by and large good advice.
Nevertheless, she says, on those few occasions when a tenant does fall drastically behind in his rental payments or behaves in any way not permitted by his lease agreement (e.g. by damaging the property), the landlord has to realize that he and the rental agent are bound by South African law to follow certain laid down procedures and these may well involve attorneys, the local courts and the Sheriff of the Court. The landlord and his agent are not permitted to take certain actions on their own.
“It is completely understandable,” says Savage, “that the disgruntled landlord who has been badly treated by his tenant should feel entitled to demand instant action – especially as regards evicting the tenant. However, he has to abide by the rules and cannot do this on his own.”
These rules, says Savage, limit the agent’s powers to issuing a warning that if arrears are not paid up legal action will follow.
“Landlords should avoid such legal actions as locking the tenant out or disconnecting services. These are criminal offences and can cause property owners more trouble than they bargained for,” says Savage.
These are the steps that the landlord is entitled to take in dealing with defaulting tenants before calling in legal assistance:
Call the tenant immediately and ask for payment. If the tenant has problems, the landlord may agree to a payment date that is more lenient, but he is not obliged to do so.
If payment is not made into the agent’s or the landlord’s account on the agreed date, the landlord must immediately send the tenant a written breach of contract letter giving seven days to remedy the default. (This period is normally stipulated in the lease agreement.) The breach of contract letter should also note the landlord’s intention to report the payment default to the credit bureaux should the account not be settled within the seven day period. This letter is normally sent by a registered debt collector such as the widely used TPN (Tenant Profile Network).
Landlords (or TPN) are entitled to register a default record against the tenant 20 business days after the letter of demand has been sent.
If the tenant fails to make payment within seven days after the breach of contract letter was sent, a written notice to cancel the lease agreement and to demand the tenant vacate the property immediately should then be delivered.
If the tenant still fails to vacate the property or disputes the cancellation of the lease agreement, the landlord will have no choice but to call in legal assistance and to proceed with an eviction order.
“Redressing the wrongs caused by an unsatisfactory tenant,” says Savage, “is a long drawn out process that can take three or four months from the day when the tenant was first warned about his arrears or other matters. Almost invariably during this period the landlord will receive no further rent from the tenant and this certainly complicates the situation.”
To avoid unfortunate situations of this kind, says Savage, it is essential to take great care in selecting the tenant – and it is here that a rental agent with access to good credit bureaux can be particularly useful.