Renting out your property?
Neil had been renting out his three-bedroom suburban property to a charming family of three for five years when they defaulted on their rental payments for the first time. They explained that they had fallen on hard times but would settle by the middle of the month. They were good tenants so Neil let it slide. Two months later the same thing was happening and again, with promises of the payments being made imminently, Neil looked the other way.
Five months down the line the excuses for the lack of payment had become very interesting, while Neil's income from the property had evaporated.
The time to take action was well overdue, and in some sense even too late because the chances of recovering that money was very slim. The tenants had to be evicted - a process that would end up costing Neil significantly in legal fees.
Had Neil acted the first time the tenants defaulted, the loss of income could have been one month's worth, rather than six.
So what's a landlord to do to avoid, or amicably deal, with what is a rather common property issue?
It's important to act swiftly, Harry van der Linde, Principal at Pretoria East Rentals, advises. "Rather than waiting until payment is a month overdue, get in touch with the tenant as soon as payment is late. Consider allowing payment on a later date, especially if they tenant is known to usually pay on time or has run into once-off financial difficulty."
Van der Linde adds that if payment is not made into the landlord's account on the date stated in the rental contract, a written notification should be issued to the tenants requesting the matter to be remedied within a given period of time (usually seven working days). Best practice is for this letter to be sent by a registered debt collector.
If seven days after the breach of contract letter was sent to the tenant the landlord still hasn't received payment, a written notice of the cancellation of the lease agreement should be sent. This correspondence would include a demand to vacate the property immediately.
"Often we find that this is enough of a warning to the tenant that you mean business and that further steps will be taken if payment is not made," Van der Linde shares.
If this does not suffice, legal action is inevitable. "The eviction process is never cheap, easy or straightforward, as the law states that tenants cannot be evicted if it means it would leave them homeless," says Van der Linde.
He adds that it is usually more advisable to forfeit the rental arrears than to take legal action, as the legal action is likely to cost far more than the loss of income from the rental. "Each case will have its own complexity, which is something a trusted property advisor will know how to deal with," Van der Linde says.
For landlords it is important to follow the right steps to ensure you have a legally enforceable eviction order at the end of it. It is also crucial to note that actions such as locking tenants out or disconnecting services is illegal and can result in trouble for the landlord and/or property owner.
At the end of the day the situation is equally unpleasant for all parties involved, and the goal is to settle it as quickly and amicably as possible, and the best way to do that is by the book.