Unpaid municipal bills – what’s a landlord to do?

The sting in the tail when a tenant moves out is often a legacy of unpaid bills

Your tenants have moved out, either willingly or through the eviction process. Then you get hit with a large unpaid rates bill by the local municipality. What do you do?

Utility bills can be a sore point for landrlds and tenants. They don't have to be.

If it comes to this, the answer is very little. It’s more important to avoid this scenario altogether. We’ll look at what to do if this happens to you, and in Utility bills – who’s responsible and how to manage them we show you how to prevent it happening again.

Whose bill is it anyway?

Ultimately, the payment of utilities and taxes (often combined in one “rates” bill by the municipality) is the responsibility of the property owner. 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.

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. There have been many cases of tenants vacating premises and leaving accounts left unpaid. Property owners would deny responsibility as the account was in the tenant’s name. Municipalities, understandably, ran out of patience and many 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.

Recovering unpaid bills 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. 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 unpaid bills against the property as well as checking the inventory and inspecting the property for damage. If you have taken two months’ rent as a deposit, hopefully you will have enough to cover what is owing. However, this may not be the case if the rates have gone unpaid for some time or if there are cleaning and repair bills to cover too. 

If the deposit in 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. An acknowledgment of debt signed by both parties is a good idea. 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.

Recovery via Small Claims Court

It is always better to settle amicably and out of court, but if that fails, and 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 and indeed are not permitted to be represented by one. Find your nearest Small Claims Court and contact the Clerk of the Court, who will instruct you in the procedure.

Help from the services of an expert lawyer

The Small Claims Court has limited powers. You may not be successful in recovering your unpaid municipal bills, or the amount may exceed R20 000. If you choose to continue to pursue your tenant for the money, you will need to sue them, using the services of a suitable law firm experienced in litigation. At this stage you will have to decide whether it is worth the hassle. Sometimes the prudent course of action is to cut one’s losses and move on. This is a personal decision, and we at SDLAW will support you if you choose to litigate.  

Prevention is better than cure

If you are reading this because you have been stung by a tenant, it is of little consolation to know that the situation could have been prevented. But presuming you will continue to lease your property and manage tenants, you will want to take the necessary steps in future to ensure you are not landed with an outgoing tenant’s rates bill again. Read Utility bills – who’s responsible and how to manage them to find out how to avoid this sting in the tail.

Seek the guidance of an expert eviction lawyer

If you need to pursue a tenant who has left you with unpaid municipal bills, contact Simon on 086 099 5146 or email sdippenaar@sdlaw.co.za to discuss your case in confidence. Eviction lawyers Johannesburg and Cape Town are experts in rental property and will help you choose the most appropriate course of action for your circumstances. We will also advise you on lease agreements and tenant screening to ensure your tenancies run smoothly in future.

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Simon Dippenaar | SD Law Cape Town

http://www.sdlaw.co.za

Simon Dippenaar has a BBusSc LLB degree and Professional Diploma in Legal Practice from the University of Cape Town, and is an admitted attorney of the High Court of South Africa. He is the founder and director of private legal practice, Simon Dippenaar & Associates, with offices in Cape Town and Gauteng representing South African and international clients.

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Disclaimer

The information on this website is provided to assist the reader with a general understanding of the law. While we believe the information to be factually accurate, and have taken care in our preparation of these pages, these articles cannot and do not take individual circumstances into account and are not a substitute for personal legal advice. If you have a legal matter that concerns you, please consult a qualified attorney. Simon Dippenaar & Associates takes no responsibility for any action you may take as a result of reading the information contained herein (or the consequences thereof), in the absence of professional legal advice.