by Wafiq Davids
Many people who own second homes for rental income purposes are highly geared in order to afford their investment. Property investment is favoured because of its’ dual effect; on the one hand, rental income is derived on a monthly basis; and on the other hand, the property grows in equity simply through the effluxion of time. This sounds great, and it is, but what happens when things go wrong, like when a tenant does not pay the agreed rental. This article will look at how you can protect the fruits of your most prized investment. We shall start with the lease agreement.
The Rental Housing Act 50 of 1999 (“RHA”) states that a lease agreement does not need to be in writing, but, it must be reduced to writing if the tenant so requests. It is therefore advisable that one indeed concludes a written lease agreement from the get go. However, problems arise not because of the existence or not, of a written lease agreement, but because people do not know and understand what is contained in the lease agreement. The point is; know and understand what your rights and obligations are in terms of the lease agreement and know what to do when there is a problem.
Furthermore, landlords and tenants often neglect the pre and post lease inspection as required by RHA. It is important that both landlord and tenant insist on a pre and post lease inspection and that this is included as part of the lease agreement. The inspections, or glitch list as it were, acts like a warranty against damages. In terms of the RHA, if a landlord retains the deposit due to damages, the landlord would have to prove that things were in order prior to occupation. The glitch list is the landlords proof, and also the tenants proof of what was or was not broken prior to occupation.
As soon as there is a breach i.e. tenant fails to pay rent as and when it becomes due; the tenant should be placed on written notice that the breach be remedied within prescribed period (varies from lease to lease) failing which the lease will be cancelled. If the tenant fails to remedy the breach a second written notice must be delivered which effectively cancels the lease agreement and demands the tenant vacates the premises.
In certain instances this swift response will result in the tenant vacating and no financial loss because the landlord simply retains the deposit. A problem arises when the landlord only reacts after months of non-payment by the tenant, and If the tenant refuses to vacate there is no other option but to commence eviction proceedings in terms of Prevention of Illegal Eviction of Land Act 19 of 1998 (“PIE”).
A landlord will need the assistance of an attorney to make the eviction application. An eviction application can cost anything from R 5000 upwards depending on the circumstances and can take as long as 6 months to get the tenant out, hence the saying prevention is better than cure. An eviction application is quite an involved process and we will not get into the nitty gritty of it here. Suffice it to say that the application is brought on affidavit setting out the breach and consequent cancellation. A date for the hearing must be obtained and the application must be served according to PIE. At the hearing date an eviction order will be granted ordering the tenant to vacate usually within 1 month, failing which the sheriff is directed to remove the troublesome tenant.
1. Draw up a written lease agreement;
2. know your rights and obligations in terms of the lease agreement;
3. carry out and record pre and post lease inspection;
4. when there is a breach in the lease agreement act swiftly to remedy the breach; and
5. if the breach persists instruct an attorney to commence eviction application as soon as possible.
This is a brief introduction to protecting rental income and evictions, it is not intended to constitute legal advice which is subject to particular facts, circumstances and the law at the time. Any liability that would or could arise from the contents hereof is hereby excluded.
Wafiq Davids is a partner at Davids & Partners, 5 Spring Street, Woodstock.
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