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Unpaid municipal bills - what a landlord can do

Dec 15 2019 09:44

Ultimately, the payment of utilities and taxes - often combined in one "rates" bill by the municipality - is the responsibility of the property owner.

This is according to attorney Simon Dippenaar, who explains that even where a tenant is intended to pay, the owner can be held liable.

"You may agree that these will be paid by the tenant, but if the tenant reneges on this obligation, the municipality will be within its rights to chase you as owner for payment," he says.

"The account may be registered in the tenant’s name, and you may have ensured a watertight wording in your lease agreement to this effect. But don’t take too much comfort from this." Many municipalities now do not allow the account to be in any name other than the registered owner of the property.

"If the account was registered prior to this decision, it may still be in the tenant’s name, but unfortunately that does not absolve you of the liability for the account," says Dippenaar.

Recovering debts from a tenant

"Your first port of call is of course the deposit. For this reason, it is a good idea not to be too hasty in returning the deposit after the tenant moves out," he suggests.

"They will of course pressure you for prompt payment, particularly if they have to pay a deposit on a new property. But you are within your rights to ensure there are no outstanding debts against the property as well as checking the inventory and inspecting the property for damage."

If the deposit is insufficient to offset the debt, in the first instance try to contact the tenant and ask for settlement. Be reasonable and offer to accept payment by instalments, he suggests.

An acknowledgment of debt signed by both parties is a good idea, in his view.

"If the tenant does not offer or is unable to pay the full amount upfront, you must pay the bill yourself. Failure to do so may result in the property’s utilities being cut off, which will only give you a bigger headache if you have new tenants or are trying to re-let the property. Recovering the debt is your problem, not the municipality’s," emphasises Dippenaar.

If you fail to settle the matter amicably and out of court, and if the debt is less than R20 000, you can pursue the debtor through the Small Claims Court.

You do not need an attorney for this action. The Clerk of the Court will instruct you regarding what to do.

If your claim fails in the Small Claims Court or if the amount owed is more than R20 000, you might need to litigate.

"Sometimes the prudent course of action is to cut one’s losses and move on. This is a personal decision," says Dippenaar.

"Make sure you take the necessary steps in future to ensure you are not landed with an outgoing tenant’s rates bill again."

Compiled by Carin Smith

simon dippenaar  |  property  |  rental  |  debt  |  rates
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