Dealing with recalcitrant tenants

Landlords are protected against non-paying tenants - but the legal process can be time consuming

The frequently heard complaint that some of our laws make it harder to collect rentals is by and large justified, says Grant Gunston, senior partner of Grant Gunston Attorneys - and, he adds, this has become increasingly apparent with the recession that we have been going through.

"In our practice's rental and levy collection department," he said, "we now have some 500 debtors. This is a two or three fold increase on the numbers from early 2008."

Particularly worrying, said Gunston, is that the number of evictions now being applied for has increased by roughly the same factor.

Many landlords, especially those in the buy-to-rent market, said Grethe Loof, head of Gunston Attorneys' rent and levy collections, find it frustrating that, although the law does offer them protection from those who breach their lease agreements, the legal process can be time consuming and costly, particularly if the landlord has to fund these bond repayments on his own for three or more months.

"The whole cancellation/eviction process will usually take about three months," said Loof.

Loof added that once the tenant has defaulted on the lease agreement by non-payment, late payment or in some other way, the landlord has the right to cancel the lease forthwith except in those cases where the lease specifies that a written demand has first to be seen. Usually the landlord can cancel immediately but sometimes he will be obliged to give the tenant a further seven days to find the money.

Once the lease is cancelled, it is possible that the tenant will not leave and an eviction order has to be applied for. The PIE Act (the Prevention of Illegal Evictions Act) stipulates that 30 days notice must be given where there is a lease agreement on a month-to-month basis. Having cancelled the lease, the landlord can apply for an eviction by means of an ex parte application, signed by the Magistrate in his chambers and at this point a date will be set for the tenant to appear in court. The signed application will be served on the tenant by the sheriff 14 days prior to the court date and only on that date can eviction be ordered by the Magistrate.

Many landlords, said Gunston, are not aware that this application must be brought within three months from cancellation of the lease agreement. If this is not done, the PIE Act places certain responsibilities on the owner before eviction can take place (for example, proving that the tenant has alternative accommodation).

If the tenant does appear in court his circumstances will be enquired into and in general he is given at least 30 days before the eviction comes into effect. If he is still occupying the property after the lapse of the time stipulated by the court, the sheriff will be authorised by the court to evict him. This can even involve placing his goods and furniture on the street or in the sheriff's store as well as replacing all the locks on the property to prevent his returning to it.

The drastic eviction process, said Loof, occurs only in a relatively few cases as most tenants will move to catch up on arrear payments or do a deal with the landlord's lawyer once legal proceedings against them start.

"The landlord has a lien on all goods in the tenant's home and a landlord can get the sheriff to attach some or all of the tenant's goods as soon as a summons or a seven day letter of demand (in terms of the Section 32 of the Magistrates Act) have been issued. After this the tenant is not allowed to remove the goods. Once goods are attached, the tenant will often "get the message" and will find the rent due or begin negotiations to put matters right. This is a robust tough measure but regrettably it is sometimes necessary."

Gunston said that right now the buy-to-rent market is very definitely worth investigating because residential properties are available at a discount to former prices and, therefore, giving better returns.

Many of the problems that are encountered with tenants, he added, can be avoided if the landlord employs an experienced agent who knows how to carry out credit and reference checks.

"In today's conditions, the vetting and selection of tenants should be done with great care. Fortunately there are reputable agents in this field."

Article by: www.grantgunston.co.za