How to han­dle late rent pay­ments

George Herald - Private Property - - Property News -

You've screened the ten­ant thor­oughly and their credit check re­turned a glow­ing re­view. You even built a clause into the rental agree­ment that stip­u­lated that any late pay­ments would ac­crue in­ter­est payable on the fol­low­ing month's rent. And yet, your ten­ant is still late on his/her pay­ments. What is a land­lord to do about this?

“The re­al­ity is that ev­ery land­lord will even­tu­ally have to face at least one late pay­ment on their rental prop­erty. To avoid run­ning into trou­ble with the bond re­pay­ments, land­lords need to en­sure that they al­low enough room be­tween their ten­ants’ rental pay­ment date and the date by which their bond re­pay­ments are due to be made,” sug­gests Adrian Goslett, re­gional di­rec­tor and CEO of RE/MAX of South­ern Africa.

Be­yond this, Goslett sug­gests that land­lords al­ways have the full bond re­pay­ment amount read­ily avail­able (whether this comes from the ini­tial de­posit that has been set aside, or their own sav­ings) in case a ten­ant is un­able to make pay­ment in time.

Lay­ing aside your own li­a­bil­i­ties, you will still need to take ac­tion to en­sure that the ten­ant does not make a habit of de­fault­ing on pay­ments. “Evict­ing a ten­ant is a dif­fi­cult and time-con­sum­ing pro­ce­dure. It is bet­ter to try and come to an agree­ment with your cur­rent ten­ant than to try and re­place him/her with an­other ten­ant im­me­di­ately,” Goslett ex­plains.

Hav­ing said that, your ten­ant is tech­ni­cally in breach of con­tract by not pay­ing by the agreed upon date. Legally, land­lords should send a for­mal let­ter to the ten­ant ex­plain­ing that they have seven days to make the pay­ment, fail­ing which their lease will be can­celled.

“It might seem like an ex­treme mea­sure to take, but you need to re­mem­ber that this is a busi­ness trans­ac­tion and if you take a le­nient stance, your ten­ant might think that there will be no reper­cus­sions for mak­ing an­other late pay­ment. The fi­nan­cial in­sti­tu­tion at which you've taken out your home loan would be­have in the ex­act same man­ner if you de­faulted on pay­ments, so you should not feel guilty for sim­ply re­mind­ing ten­ants of their le­gal obli­ga­tions to you,” Goslett ad­vises.

If the ten­ant fails to act on this let­ter af­ter the stip­u­lated seven-day pe­riod, you are legally al­lowed to ter­mi­nate the lease and ask the ten­ant to leave. Hope­fully, the ten­ant will com­ply.

But, if they fail to va­cate the prop­erty, then you might have to seek out a court or­der to evict them for breach of con­tract. This process can take up to six months, dur­ing which your ten­ant can re­main in your prop­erty and con­tinue to de­fault on pay­ments.

“This is why the screen­ing process is so im­por­tant when it comes to leas­ing a prop­erty. Choos­ing to make use of a re­li­able rental agent who knows all the tell-tale signs of an un­re­li­able ten­ant can save you the trou­ble of deal­ing with a ten­ant who nei­ther pays his bills nor va­cates the prop­erty,” Goslett con­cludes.

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