Caught on the wrong side of tenants' rights

In March last year, Judith Finch (name changed) discovered at first hand the risks of letting out property and the inalienable rights of squatters. ‘Several years ago I bought a flat in Cape Town, which I rented out fully-furnished to provide me with an income. The plan was to relocate to Cape Town from Johannesburg when my husband retired.’ In the end, Judith and her husband decided to stay in Johannesburg to live closer to their grandchildren.
When her tenant’s lease came up for renewal on 28 February last year, her tenant decided not to renew. ‘I took this as a sign and decided to sell the flat and invest the money elsewhere.’

Judith called the tenant and made arrangements to come down to Cape Town and clear out the furniture. ‘I was only able to get to Cape Town on 14 March. The tenant then said that the place she was moving to had fallen through, and asked if she could please stay on until I arrived. Naturally I agreed.’

But when Judith got to Cape Town in March, as agreed, the tenant refused to go.

(Left: The view up the inner well of the 54-storey Ponte Tower in Johannesburg, once a luxury residential apartment block. In the early 1990s, its upmarket clientele left and the area fell into disrepute. The well became a convenient garbage dump for the low-income tenants, who were the only people prepared to live there. Often, squatters moved into the vacated apartments and the building declined. Since 1998, there have been moves to revamp the Ponte and restore its former glory).

The letting agent informed Judith that she had invalidated the lease by allowing the tenant to stay on for the extra two weeks and therefore the tenant now had squatter rights. ‘I received a call from a person, claiming to be a human rights lawyer, who said that I was responsible for assisting the tenant in finding new accommodation and must allow her to stay in the flat until accommodation was found,’ says Judith. Fortunately in this case the purchaser and new owner of the flat was an advocate and he took over the problem and sorted it out.

Salvatore Puglia, a Cape-based attorney, says this situation is not unusual. ‘I handle numerous cases every month where tenants refuse to vacate a property.’ Puglia says in Judith’s case there was really nothing she could have done differently. Even if she had not given permission to stay on the extra two weeks, the tenant would probably have still adopted the same attitude. ‘The landlord therefore has no choice but to issue summons for eviction and to proceed in terms of the Prevention of Illegal Eviction From and Unlawful Occupation of Land Act (PIE Act),’ says Puglia.

Puglia maintains that the so-called human rights lawyer was incorrect in claiming that Judith had to assist the tenant in finding alternative accommodation.

In another case, the owner was not so fortunate. He bought a townhouse at a liquidation auction. At the time he took ownership there was an existing tenant who claimed to have a lease agreement. According to the law, a lease agreement supersedes the sale of the house and the new owner had to respect the rights of the tenant. He requested on several occasions to see a copy of the lease but the tenant ‘could never find it’. During this time the tenant did not pay a single cent towards rent.

When the tenant finally produced the lease the owner suspected it was a fake. Not wanting a lengthy and expensive court battle he offered the tenant R30 000 to vacate the property. The first payment of R15 000 was made but still the tenant did not leave. The owner finally had to take the case to court; the tenant was ordered to pay R40 000 and forced to leave the townhouse.

Puglia confirms that this situation can arise when you buy a property that has an existing tenant with a current lease. ‘It is extremely important when buying a property that you stipulate in the offer to purchase, if possible, that the tenant must have vacated the premises before transfer in order to prevent inheriting this type of problem.’ The right of the tenant is protected by the ‘huur gaat voor koop’ law, which means ‘lease goes before sale’.

Before you rush off and sell all your rental properties, Puglia points out that although these situations are commonplace, the law is on the owner’s side. ‘First, the law is under review at the moment as the courts have recognised that the PIE Act is being abused by people who want to get away with not paying rent.’ Puglia states that magistrates are sympathetic to landlords in these cases and that the Constitutional Court protects one’s right to own property and benefit from the ownership of that property.

If, as a landlord, you find yourself facing a hostile tenant who refuses to pay rent or vacate the premises at the end of a lease, you need to act quickly says Puglia. In terms of the PIE Act, you need to issue the tenant with a PIE application as well as a summons informing them of your intentions to evict them. In the application, you need to give reasons as to why their behaviour is unlawful, as well as whether you are claiming arrear rental and/or termination of the lease agreement. If you have a bond over the property you can highlight the fact that the situation is putting you at financial risk. The application also needs to be served on the local municipality. The application will indicate a date of enquiry (trial date), which can be set within a month of the summons, thereby giving the defendant (tenant) sufficient time to prepare a defence.

Puglia says that while magistrates, generally, are on the side of the landlord they will also take into consideration the plight of the tenant, especially if there are children involved. ‘The magistrate has to weigh up the situation of both the landlord and tenant and may give up to two months for the tenant to find alternative accommodation.’ However, once that date is set, the magistrate is very strict in enforcing the eviction and will order the sheriff to execute the warrant of ejectment.

‘The system is working, but people have to understand that it can take time and that they need to act immediately to sort out a problem.’ Depending on the time frame the whole procedure can cost between R2 000 and R5 000.

Sven Black (name changed), a Gauteng-based property developer and property owner, is not convinced that the system is working. ‘It is a huge problem and the law needs to be changed to create a quicker solution mechanism.’

Black says in his experience attorneys tend not to be interested in the problem because these are relatively small cases for them. ‘It can land up being an expensive exercise and you usually cannot recoup the costs from the tenants because 90 per cent of the time they don’t have any money, which is why they are not paying in the first place.’

Black says another problem is continual late payment. ‘For some reason, tenants think they have seven days after the due date to pay their rent irrespective of what the lease says.’ This has serious financial consequences for landowners who have bond payments to meet at the beginning of every month. ‘There are very few companies that pay salaries later than the first of the month so there really is no reason why the rent should be paid late.’ Puglia confirms that the tenant is obliged to pay on the date stipulated on the lease and that legal proceedings can start once that date has passed.

Dave Heron, a managing agent for six body corporates contests that while the PIE Act has made it a lengthier and more difficult process to get rid of tenants, prior to the Act tenants had no protection at all. ‘There were cases where tenants could be asked to leave with no notice because the owner wanted his brother to move in, that also was not fair.’

He does agree with Black that the law has swung too far and that unscrupulous people are using the law to their advantage. ‘I have seen cases where tenants have literally trashed the premises when a summons has been issued, costing the owner tens of thousands of rands in repairs.’

Heron was involved in two recent cases where the owners took the case to the magistrate and in both instances the magistrate ruled in favour of the landowner. ‘But it does take time and you could wait for more than two months while your tenant is living rent-free.’

Heron advises would-be landlords to ensure that they can cover unforeseen costs, either privately or via the rental, before they rush into purchasing a property to rent out. ‘People often forget that tenants don’t look after a place as if it was their own and the maintenance costs when they leave can be very high.’

Another issue that has been raised with the introduction of the PIE Act is the live-in domestic worker concerning townhouses and flats, particularly with older blocks where each flat may have the right to a room for a domestic worker. Puglia says the same tenancy rights apply to staff and they could be deemed to have beneficial occupation of premises. So when you sell your flat and move on, you may find that your domestic worker doesn’t.

Problems also arise if a live-in worker flouts the rules of the complex. Trying to evict them can be a long legal battle. Andy Summers (name changed) is the chairman of a body corporate of a townhouse development in a Johannesburg northern suburb. When he took over there were major issues with the workers’ rooms. Not only was there overcrowding but, he claims, ‘one of the chaps was running a dagga cash-and-carry. Every evening smart youngsters in fancy cars would pull up to buy their drugs!’

Because of the PIE Act, Summers had to be very careful in how he handled the situation. ‘At the end of the day we just let natural attrition take place and as people inevitably left jobs and their rooms, we locked them and did not allow any more people to live there. We did have an issue with a security guard we were obliged to retrench, but we made his vacating the room part of the retrenchment package.’

Heron emphasises that if you have a good tenant who pays on time and respects your property, hold on to them. ‘Don’t just hike the rent up and then discover they can’t stay. Meet with them, have a cup of tea and discuss a reasonable solution. A good tenant is extremely valuable.’


Five things you must do before taking on a tenant

1 Ask for, and check, references from previous landlords.

2 Get a reference from their current employer with a copy of a recent payslip.

3 Do a credit check through TransUnion Information Trust Corporation (ITC).

4 Ask for bank statements to ensure that the tenant can afford the accommodation.

5 Get copies of ID books and/or driver’s licences as well as addresses of relatives and employers.

6 Make sure you have a signed lease agreement.

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Article by: Maya Fisher-French - www.thepropertymag.co.za