When renting out your property to someone that you don’t know personally, it can be a scary process and sometimes even be a financial “thorn” in your flesh. Defaulting rental payments, breach of the lease agreements and/or damage to your property are only some of the examples of risks that you as an owner must mitigate and manage.
Legislation and case law sometimes make it difficult for the owner of the property to evict a defaulting tenant and recover outstanding rent if the prescribed processes and procedure are not adhered to.
Before handing over the keys to a new tenant, ensure that you have done the following that could mitigate your risks and damage:
Your 10 Tips
- Always ensure that you obtain copies of the ID documents of the tenants;
- Request the prospecting tenants to provide you with 6 month bank statements and/or payslips. Peruse and scrutinize the documents and ensure that their income is enough to pay rent and cover their expenses;
- Ensure that you have a properly drafted and signed lease agreement in place. In this regard, always contact your attorney to assist you in the process. If a properly drafted lease agreement is not in place, it could mean factual disputes and more legal costs when it comes to eviction steps against the tenant;
- Request references of previous landlords from whom the tenants rented. Phone these references and ask them about the history of the tenants regarding the payments of rent;
- Ensure that you do a proper credit search on the prospecting tenants to ascertain whether or not they have judgements and/or defaults against their names, have they ever been sequestrated (Liquated?) or under debt review? You will need the written consent of the prospecting tenants for the credit search. Their credit history would give you an indication of their ability to pay rent. Weigh up all these factors before making your decision!
- If the prospecting tenant is a company or legal entity, ensure that they provide you with the official company registration papers and registration number. Also conduct the same procedures as points 2, 3, 4 and 5 above. Ensure that the directors of the company sign a surety on behalf of the company to enforce your remedies against them when there is a breach of agreement or default payment;
- Ensure that you have at least 2 months’ worth of rent in your account for a deposit before handing over the keys;
- Contact your attorney for eviction steps and recovery for arrear rental payments on the first day of default by the tenants! Don’t wait a month or two on “promises” of payments by the tenants. These payments often do not happen.
- When there is a breach of the agreement, for instance non-payment of rent, contact your attorney to place the tenants on terms with a formal letter of demand in accordance with the lease agreement and legislation. Don’t try to do it yourself as there are legislation like the Consumer Protection Act, 2008 (Act No 68 of 2008) and Rental Housing Act,1999 (Act No 50 of 1999) and case law that need to be applied through this letter and/or notice;
You can read the relevant legislation here: www.saflii.org/za/legis/num_act/cpa2008246.pdf
Consumer Protection Act, 2008
Rental Housing Act, 1999
Trust your attorney! He is your best friend!
The abovementioned list is not an absolute guarantee that you will get a good paying tenant. This list is merely a guide to help you through the process if you conduct this exercise by yourself. The best advice is to contact your attorney before you hand over the keys to assist you through the process and get the proper documents in place. Don’t be penny wise, but pound foolish! If you have any enquiries regarding eviction, court proceedings and action for recovery of arrear rental payments, please send an email to email@example.com for assistance.
(This article is an information piece and not a formal legal opinion. HFG Attorneys accepts no liability for damages caused by errors and omissions)
HFG Attorneys // Prokureurs in die Paarl
Criminal Law / Family Law / Civil Litigation / Fire Arms Control Act Specialist