Advice and Opinion

The cost of evicting a tenant

In evictions, the most important thing is to stop the financial bleeding. The amount of blood and pain on the landlord’s part, however, depends on factors such as a stubborn tenant who refuses to budge as well as the legal team hired.

“Some recalcitrant tenants vacate after receiving the first demand from an attorney to do so. Others put up a fight and remain in the property for longer,” says Willem le Roux, director at eviction specialist firm, Le Roux Attorneys. “The longer the fight to get the tenant out, the more expensive the eviction process. I’d say the ballpark figure is from R5,000 to R15,000″.

“Get bad tenants out as soon as possible – even if it means offering to write off some of the arrear rental.”

When a notice is opposed

Marlon Shevelew of rental property law firm, Marlon Shevelew and Associates, says costs to evict a defaulting tenant can significantly escalate in the case of an opposed eviction.

“Fees range from R6,000 to R25,000 for an unopposed eviction, and up to R100,000 depending on the court, the province in which it is launched and whether or not it is opposed,” he says, noting that these costs will come out of the landlord’s pocket, though they can be passed on to the tenant.

South Africa’s official unemployment statistics reveal that a quarter of the workforce does not earn a regular income, with many sectors bleeding thousands of jobs every year – a case in point is Witbank’s stalwart employer, Highveld Steel and Vanadium which closed shop last month, retrenching more than 2,000 workers.

In cases such as these, rental defaults will be very high and if the legal route is followed from start to finish – which can take up to 18 months – a landlord may battle to recoup legal and court fees as well as outstanding rental from tenants.

“Presupposing you have an eviction order and a Sheriff is there to forcibly remove the tenants, the cost depends on the size of the property and the number of tenants,” says Michelle Dickens, MD of Tenant Profile Network. “It is notoriously difficult to claim for these costs as part of the overall damages and legal costs. For example, there was a case involving 200 families which cost R2m for the Sheriff to evict the tenants”.

“Landlords who have an illegal occupant in the property and who have not performed unfair practise, will always obtain their eviction order successfully. The real question is, if the tenant is a woman-headed household with young children, disabled or elderly, will the courts still grant an eviction order? The courts will grant an eviction order but will allow additional time for the tenant to vacate the property.”

Can you back your jockey in court?

Le Roux notes that landlords and their attorneys should be very sure of winning in court, as a loss will see landlords owning money to the court and attorney, as well as being stuck with the same tenant.

“It might take some time, but if the attorney handling the matter knows what he or she is doing, then the client should be successful,” he says. “A case with doubtful prospects of success should not be in court – the parties should rather seek to settle. If the attorney handling the case is not experienced in eviction matters, then the risk of losing the case increases exponentially.”

Dickens agrees, saying that while evictions are costly, using an attorney who is not well versed in the technical aspects of evictions can end up delaying the process which costs the landlord more in loss of rentals due to the process having to be reset.

“For example: a letter of demand is addressed to only one of the tenants and not addressed to both co-tenants,” says Dickens. “In this instance, even though the lease was cancelled with tenant 1, the whole 20 day letter of demand process has to be resent to cancel the lease for both tenants.”

Thankfully, however, there a number of products on the market which assist in rental guarantee. One of them is RentMaster which was established in 2003 and effectively safeguards landlords’ investments by providing rent guarantees.

Its MD, Deon Botha, says,“Landlords’ biggest risk when faced with a non-paying squatting tenant is the uncertainty and loss of cash flow required to fund the costly legal eviction process. RentMaster takes on the risk of tenant non-payment, thereby providing the landlord with the certainty of knowing that the rent will be paid to the landlord on the first of the month guaranteed. And as a bonus, RentMaster will also fund and manage the daunting eviction process”.

“We charge 4.56% of the rent plus R60 per month (incl VAT). On a R5,000 per month rental that translates to R288 per month.”

* This story first appeared on hometimes.co.za.