Penalties on Late Rental Payment
Category Leasing
Over the past year, many tenants have found themselves experiencing financial difficulties due to the COVID pandemic and related economic difficulties. As a result, many tenants may find themselves unable to pay the full rental amount which is due.
For Landlords with mortgage bonds and other related expenses, such as property maintenance or utilities payments, the late or non-payment of rental can have a detrimental effect on their ability to make the payments for which they are responsible.
In terms of the law, it is important for all parties concerned to understand their rights and responsibilities in such circumstances.
Tenants should understand that if their lease agreement states that payment is due on the first of each month, then that is the date upon which the funds should reflect in the landlord's account. There is no law or regulation that states that a tenant has 7-day grace period. Failure to pay the rent by the agreed upon date, constitutes an automatic breach of lease agreement and if this is not rectified, then it can lead to eviction from the premises, goods/possessions being attached, and being listed with the credit bureau.
The landlord is not entitled to claim late payment penalties of any sort, other than interest on the outstanding amount which may not exceed 2% per month (24% per annum), as per the National Credit Act. Interest may be levied on overdue amounts from the day upon which the late rental amount was due. The landlord is also not permitted to lock the tenant out of the property or disconnect any of the utilities (water and electricity) and doing so would constitute an offence. The landlord may not attach or remove any of the tenant's possessions - this must all be done through the courts.
Where a tenant has paid late, the landlord should contact the tenant to establish what the problem is and when payment can be expected, although this is not mandatory. If an agreement to settle the outstanding amounts cannot be reached then letter of demand should be issued to the tenant by the landlord, stating that the rental is late and that the tenant is in breach of the lease. The tenant then has 20 days to rectify the breach, after which the landlord may begin with legal proceedings to recover the debt and/or begin the eviction process.
Where there are disputes between the landlord and tenant, they can approach the Rental Housing Tribunal to assist with mediation and arbitration between the parties. More information can be found here: https://www.legalwise.co.za/help-yourself/quicklaw-guides/rental-housing-tribunal-resolving-landlord-and-tenant-complaints
Author: Richard Abrahams