Answers to lockdown rental questions
MAIN IMAGE: Marlon Shevelew, specialist rental property attorney.
The sudden 21 day lockdown has left thousands without income and in dire straits about how they are going to meet their rental obligations. Specialist rental property attorney Marlon Shevelew weighs in with legal advice for estate agents.
Someone said earlier this week that the one thing one can be certain of in these uncertain times is uncertainty. As President Cyril Ramaphosa said earlier this week, the current situation with the coronavirus pandemic and the nationwide lockdown to curb the spread of the virus, is unchartered territory.
Last week Shevelew in ‘Lockdown: How to deal with rent and levies’ explained that the current lockdown would qualify under the law as an ‘act of God’ (in legal terms called force majeure or vis major) and how that then impacts on the legal obligation to meet residential and/or commercial rent requirements. The response has been unbelievable. Tenants, landlords and rental and estate agents alike have responded with a torrent of queries: What about tenants that are self-employed/sent home because their business closed due to the lockdown – so no income to pay April’s rent? Can a landlord threaten to blacklist a tenant who can’t pay rent? What does the law say about sectional title levies that are due? What about rental for vacated student accommodation?
Property Professional asked Shevelew to respond with more legal advice on how to deal with some of the most asked questions.
1. No income due to lockdown, but landlord says rent is due. What are my options as tenant?
Answer: Unfortunately, you are obliged to pay your rental at this stage. Your residence was rented for the purpose of providing yourself a place to stay and you are able to make full beneficial use of the property for this purpose. The fact that you cannot earn an income does not release you from this obligation. Your position is tantamount to someone who has been retrenched.
2. Can a tenant be blacklisted by an estate agency for failure to make rental commitments?
Answer: In principle, yes. However, in an industry circular the National Credit Regulator has declared that the days of the lockdown are not included in business days. See in this regard: https://debtfreedigi.co.za/lockdown-days-are-not-business-days/.
To have an adverse listing made on a consumer’s profile, they need to be three consecutive billing cycles behind and must have been given 20 business days’ notice of the intention to load the adverse listing. If the tenants were already in arrears and had received a notice, but the 20 business days had not expired prior to the lockdown, then the adverse listing will only be able to be made after the lockdown. If there had been no notification prior to the lockdown, then the notice period will only begin to run after lockdown, but in principle the adverse listing will still be able to be made once that time has run out.
3. The Sectional Titles Act requires all owners to pay their levies no matter what. If owners decided, because of the coronavirus not to pay, many bodies corporate would become bankrupt. Are levies on the same footing as rents?
Answer: The point of departure in a lease is that if a tenant does not have beneficial use, it will be entitled to remission of rental; this is the common law position of a tenant iro vis major. Nonetheless, a tenant’s entitlement to remission of rental can be excluded by agreement between a tenant and a landlord; this is usually done by a clause regulating the effects of vis major (often called a force majeure clause). Some leases, for example, state that rent is payable even if the tenant is unable to make use of the property as a result of vis major.
The legal relationship between a body corporate and an owner of a sectional title is regulated by statute, and not based on the principles of beneficial occupation, etc. It is on a completely different footing and regulated by completely different principles. The point of departure is therefore not the same as in leases, and a landlord will not be entitled to withhold levies.
4. What about rental for student accommodation? Many parents with children in universities signed lease agreements for private student accommodations where students are no longer in the accommodation as they were told to pack up and return home.
Answer: In this case the question will arise: what was the purpose for which the property was let. If the agreement makes clear that the private student accommodation was let for the express purpose of a student studying at a university, then perhaps the tenant will be entitled to remission of rental. But if the lease is a standard lease which merely entitles the tenant to occupy it, and the tenant vacated it voluntarily, then the tenant will likely not be entitled to remission of rental. In the case of official university residences, a student residing there will have a much higher chance of being entitled to remission of rental, assuming of course that there is no clause excluding remission of rental even in the event of vis major, as a student in such a case will not be able to have beneficial use of the property.
5. How many months can tenants be given rental holiday?
Answer: A commercial tenant, where a lease does not exclude remission of rental as a result of vis major, will be entitled to remission of rental for the full period of the lockdown. A residential tenant is not entitled to any holiday, but if the landlord should decide to grant one, the duration is essentially an indulgence and therefore up to the landlord to decide.
6. If a tenant’s lease ended at the end of March, but he asked to stay on until the end of lockdown, is he entitled to his deposit? Linked to this query, some landlords have been demanding that rental agents pay over the rental deposit of tenants who can’t pay their rent. Can they do this?
Answer: In terms of the Rental Housing Act 50 of 1999, where a tenant remains in occupation of a property after the expiry of a fixed-term lease, that lease will continue on the same terms, save that it will be a periodic lease and either party will be able to terminate on one calendar months’ notice. Therefore, the tenant will be entitled to have the deposit returned on the same basis as it would have in the original lease. The Act does not make provision for use of the deposit during the duration of the lease; landlords are not entitled to demand that the deposit be paid over, as this is contrary to the wording of the Act.
7. What about tenants who are already in arrears with their rent? One landlord has a tenant who is 3 months in arrears. The electricity bill alone is already R20 000 and the rentals in arrears are over R70 000. The contract is concluding end of April. The landlord is outside the country and not able to return due to the coronavirus pandemic. What can he do in this situation?
Answer: Tenants who are in arrears are a common problem faced by landlords. In this regard an attorney should be approached who can send out letters of demand, and once lockdown is over, issue legal process to ensure repayment of the arrear rental, and eviction, if necessary. Whether this will be the desired course of action, as opposed to waiting to see whether the tenant pays up is difficult, and a decision which the attorneys can also assist with.
Shevelew concludes with the following: “The above content is intended to provide general guidance on the particular questions raised only and should not be regarded as general legal advice, as each situation is unique. Professional advice should be sought before any actions are taken based on such content. Accordingly, any liability that would or could arise as a result of the content of this opinion is hereby excluded to the fullest extent allowed by law.” He can be contacted on firstname.lastname@example.org.