Tenant in arrears and not paying? Landlord’s Secret Weapon

Scenario: you have a tenant who has been leasing a townhouse from you for 12 months now. About 6 months into the lease agreement the due date for payment arrives but he hasn’t paid his rent. You follow up, only to be told that he’ll pay as soon as possible, but that day doesn’t come. This continues for another 3 months, until finally you are fed up with the constant nonpayment and excuses. What do you do?

For many owner’s finding a tenant who will ensure your property is properly maintained and that will pay on time, is hard to come by. The knock on effect on a Landlord’s pocket can be quite hefty when tenant who fails to pay their rent and other charges.

 

The usual process that one should follow is firstly notifying the tenant that he or she has breached the lease agreement, and allowing them sufficient time to rectify their breach, normally in the region of 10 business days, in other words to pay the outstanding rent owed to you. This can be done by means of a lawyer’s letter and ensures you have compiled with the requirements of the National Credit Act. Hopefully once receiving the letter, the tenant is set right and pays his arrears.

More often than not, this is not the case and tenants continue occupying the premises despite being in breach of their obligations.

Once the tenant has been placed in breach, the landlord is entitled to cancel the agreement and notify the tenant, much the same as the first step. When the lease has been lawfully cancelled, the landlord can evict the tenant, as he is unlawfully occupying the premises.

 But, once again many tenants will chose to ignore the landlord’s cancellation and carry on disregarding the illegality of their actions. But, what a lot of owners are fail to realise, is that they have a secret weapon to ensure the outstanding rent is recovered – the “hypothec”. This is a form of real security the Landlord has over the tenant’s movable goods which are present on the leased property, on the date the tenant falls into arrears. This operates as an excellent tool for commercial and residential properties, especially where the Tenant may keep valuable assets and/or equipment on the leased premises. But, this right does not automatically arise and the Landlord needs to take steps to secure his right. In other words the landlord has to restrain the removal or sale of the goods on the property pending an action for arrear rent or an order for their attachment by the court. Once the goods have been “attached” (i.e. identified by the sheriff and an inventory compiled), the tenant cannot legally remove the goods. If he proceeds to move the goods, the Landlord can press criminal charges against the Tenant.

Should you require any further information on this topic you are welcome to contact our offices on 011 897 1900 or [email protected].

 

 

Article contributed by Stacey Bonser of Tuckers Inc.