In cases where the tenant fails to pay rent, there are various ways in which a landlord can recover unpaid rental income from tenants:
In summary, landlords in South Africa should not experience a lot of difficulty when trying to recover amounts owed to them.
This article will examine whether or not a landlords’ right to receive rent is adequately protected by the law, by exploring the avenues available to recover rental income from tenants who are in arrears.
In recent years, the cost of living in South Africa has skyrocketed through the roof. Increases in fuel prices, interest rates and food prices have resulted in people having less spending power with their earnings than they had before. As a result, many people have been forced to drop their standard of living. Tenants have been experiencing difficulties in keeping up with their monthly rental payments and the same applies to landlords; they have been struggling to make their monthly bond repayments on time.
One can argue that the reason why some landlords are struggling to make their repayments on their bonds is due to the fact that tenants are struggling to pay their rent. As a result, some landlords fear losing their investment properties because of non-payment toward their mortgage bond, as and when payments are due, because they simply did not receive the rental income they expected to receive from their tenants.
In this light, it goes without saying that landlords have experienced difficulties in collecting rent from tenants. Some landlords are not aware of the avenues available to them to collect unpaid rent from their tenant. The easy case occurs when the landlord exercises his right to hypothecate the tenant’s property or retain any deposit paid by the tenant. The issue lies when the tenant vacates the property before paying the outstanding amount, making it difficult to lay claim to his moveable property as a pledge to secure the outstanding payment.
A rental agreement is described as:1
“a lease of immovable property that is generally a reciprocal agreement between the lessor and the lessee, in terms where the lessor agrees to give the lessee the temporary use and enjoyment of the property, in return for the payment of rent.”
As a point of departure, we will examine the nature of a lease agreement. This requires us to look at the duties of both the landlord and tenant, before looking at the remedies that could be available to the landlord. Although the relationship between the landlord and tenant will, in the most part, be governed by the lease agreement, some aspects of the relationship will be governed by common law.
The Duties of Landlords.
It goes without saying that for the tenant to use and enjoy the property, the landlord has a duty to ensure the delivery of the property to the tenant. Delivery of an immovable property can take place by the handing over of keys or allowing the tenant to gain physical access to the property2. The landlord must ensure that the property is fit for the purpose that it was leased for, unless there was an express agreement that the tenant will make the necessary alterations to the property to suit its purpose.
The landlord must also ensure the undisturbed use and enjoyment of the property, failing which; the tenant will have a right to withhold the payment of rent. Such an obligation gives rise to a duty to maintain the property. 3Unless it is agreed upon in the lease agreement, the landlord has the duty to maintain the property so the tenant can use the property, to the extent that he/she is entitled to. This would include the payment of rates and taxes etc.4
The Duties of Tenant
The tenant should pay the rent as and when it is due. However, the tenant can withhold the payment of rent, in full or partly, on the basis that he/she was restricted to use and enjoy the property5. According to the Supreme Court of Appeal6, the obligation of a tenant to payment may be relaxed, in whole or in part, in proportion to the interference caused. Although the case of Slabbert N O & 3 Others v Ma-Afrika Hotels7 dealt with the eviction, the court considered the cases in which a tenant may withhold rent. A tenant has the right to withhold rent in cases where the landlord caused and restricted the use, and enjoyment of, the property that the tenant was entitled to. Such restriction does not only have to be caused by the landlord. The court held that, even in cases where a vis major (“Act of God”) resulted in the diminished use and enjoyment of the property, the tenant will have the right to withhold the payment of rent. The court, however, stressed that the diminished use and enjoyment must be a direct result of such vis major. In cases where the tenant withholds rent for any other reason, other than the reasons mentioned above, the landlord will have a right to claim all rental payments due.
Remedies for Non-payment of Rent.
The landlord has a right to claim from the tenant all rental amounts that are due and payable to him, with interest, in cases where the tenant defaults in terms of the contract. There are a few remedies that are available to the landlord when a tenant defaults in their rental payments. Firstly, the landlord may withhold any deposits paid to him and use those amounts to settle any unpaid rent by the tenant. The landlord can also use his tacit hypothec. This will ultimately allow the landlord to lay claim to the tenant’s moveable property to secure payment. Secondly, the landlord can approach the courts for a summary judgement that will allow him to claim for amounts that are due to him, without the burden of an expensive trial. Lastly, the landlord may institute action proceedings for the eviction of the tenant.
A lessor’s tacit hypothec exists to secure the fulfilment of the tenants’ contractual obligations.8 In this way, the lessor will be in a position to attach the moveables of the lessee, and sell them, in order to recover amounts owed to him.9 The lessor will only have a tacit hypothec against the moveable property, brought into the premisesto be used by the tenant.10 It should be noted that such a remedy is not only limited to secure the payment of rent in arrears but also includes the fulfilment of other obligations, such as restoring the property to its original position11. South African Scholars have been divided on whether a tacit hypothec is only available to the landlord for securing unpaid rent, or whether it can be extended to secure payment for damages caused by the tenant. This issue was ultimately settled by the High Court in Solgas (Pty) Ltd v Tang Delta Properties CC12. In this case, the landlord’s claim to uphold his hypothec to secure the payment of damages, arising from the failure to repair and restore the property to its original state, was granted by the High Court.
One should note that only moveable property found on the leased premises, belonging to the tenant, may be hypothecated. However, in some cases, property belonging to third parties may be attached as security for payment.13 This can only occur in exceptional cases, where the landlord was not aware that the moveables, on the premises, belonged to a third party.
Rule 32 Uniform Rules of Court allows for a summary judgement which offers a plaintiff a speedy and inexpensive trial in situations where the defendant doesnot have a defensible claim against them.14 The plaintiff can only institute the proceeding on the basis of a liquid claim, for the delivery of a moveable or for ejectment.15 In these cases, no evidence will be heard in any manner, other than in the form of an affidavit, and no one may cross-examine any party to the proceedings.16 This allows for a speedy and inexpensive way that the landlord can use to claim for unpaid rental amounts.
If the lease agreement allows for the termination of the lease, based on unpaid rent, the landlord may rightfully terminate the agreement. However, he is prohibited from evicting the tenant without a court order.17 In such cases where the lease agreement was terminated based on unpaid rent, the landlord can institute legal action for the eviction of the tenant from his property.18 The landlord can seek an order confirming the termination of the contract and the eviction of the tenant. It must be noted that, in the interest of justice, the court might not eject the tenant with immediate effect. The court will have to give the tenant a fair opportunity to relocate and vacate the premises.19
In conclusion, there are various ways in which a landlord can recover unpaid rental income from tenants. A landlord can choose to withhold the tenant’s deposit. He / she also has the option to attach property bought into the leased premises by the tenant, in order to sell it and recover amounts that are due to him / her. In cases where the attached moveables are not enough to set off what is owed to the landlord, he / she has the option to institute legal action to compel the tenant to pay the outstanding amount. Therefore the landlord’s right to receive rent is adequately protected by South African Law.
1 Slabbert N O & 3 Others v Ma-Afrika Hotels t/a Rivierbos Guest House ZASCA 152 par 18
2 G D’Amato ‘The duties and rights of tenants and landlords under Swiss and South African law – A comparative analysis’ Unplublishe LLM thesis, University of Cape Town 2015 12.
3 G D’Amato (n 2 above) 13.
4 G D’Amato (n 2 above) 15-16.
5 Slabbert N O & 3 Others v Ma-Afrika Hotels t/a Rivierbos Guest House ZASCA 152 par 18
6 Slabbert N O & 3 Others v Ma-Afrika Hotels t/a Rivierbos Guest House ZASCA 152 par 22
7 Slabbert N O & 3 Others v Ma-Afrika Hotels t/a Rivierbos Guest House ZASCA 152
8 Solgas (Pty) Ltd v Tang Delta Properties CC ZAGPJHC 158. par 41
9 Transnet Soc Ltd t/a Transnet Property v EBS Funeral and Tombstones Cash and Carry ZAFSHC 26 par 20
10 NS Siphuma ‘The Lessor’s Tacit Hypothec: A Constitutional Analysis’ unpublished LLM thesis, University of Stellenbosch, 2013 page 22
11 Solgas (Pty) Ltd v Tang Delta Properties CC ZAGPJHC 158. par 71
12 Solgas (Pty) Ltd v Tang Delta Properties CC ZAGPJHC 158
13 AJ Van de walt & NS Siphuma ‘EXTENDING THE LESSOR’S TACIT HYPOTHEC TO THIRD PARTIES’ PROPERTY’ 2015 SALJ. Page 545-546.
14 Act 59 of 1959 Uniform rules of Court. rule 32
15 Act 59 of 1959 Uniform rules of Court, rule 32(1)
16 Act 59 of 1959 Uniform rules of Court, rule 32(4)
17 G D’Amato (n 2 above) 24-25
18 MV Andre Builder Joiner CC v Nordien ZAWCHC 255.
19 MV Andre Builder Joiner CC v Nordien ZAWCHC 255. par 42
Written by Mpho Molapo
Moderated and approved by Wessel de Kock