CPA Implications for Landlords:
21 June 2013
The Consumer Protection Act (CPA) was signed into law on 24 April 2009 and has empowered the consumer and changed the way that businesses deal with their customers – including the relationship between landlords and tenants.
“Section 4(4) of the CPA requires any contract, or document (i.e. a lease) prepared by a supplier (i.e. a landlord) to be interpreted to the benefit of the consumer (i.e. the tenant). This means that tenants will be afforded far more leeway when it comes to their grievances,” says Shevelew.
Marlon Shevelew, Director of Marlon Shevelew and Associates Inc, a firm specialising in Landlord-Tenant Law and Consumer Law, believes that the most important thing that landlords should be aware of when it comes to the implications of the CPA on renting property to a tenant is that the CPA will always ensure that the tenant has the greatest protection, according to section 2(9) and section 4(4) of the CPA.
“Section 4(4) of the CPA requires any contract, or document (i.e. a lease)prepared by a supplier (i.e. a landlord) to be interpreted to the benefit of the consumer (i.e. the tenant). This means that tenants will be afforded far more leeway when it comes to their grievances.”
He notes that both the CPA and the Rental Housing Act (RHA) are equally applicable when it comes to governing the relationship between landlords and tenants, but when an anomaly appears as to the interpretation of the lease, it is likely that the rights of the tenant will trump those of the landlord when interpreting any particular wording or section of the lease, as this is what the CPA dictates.
The landlord’s obligations to the tenant are prescribed by the RHA, which states that the landlord must provide the tenant with a written receipt for all payments received. In addition, the landlord must conduct incoming and outgoing inspections of the property in the presence of the tenant in order to determine what damages there are to the property. The RHA dictates that, when the lease expires, the landlord may deduct the cost of repairing any damages from the tenant’s deposit, provided that the tenant is liable for such damages in terms of the lease. The remainder of the deposit, plus interest, must then be refunded to the tenant by no later than twenty one days after expiry of the lease.
It’s important to note that, according to the RHA, if the landlord does not conduct the outgoing inspection in the presence of the tenant, it is deemed an acknowledgement that the property is in a proper state of repair, and the landlord will be responsible for refunding the tenant’s deposit in full, plus any interest.
A recent research survey undertaken by Torus Capital looked into the common administrative tasks that landlords are faced with – some of which are prescribed by the RHA. The goal of the survey was, among other things, to gain an understanding of the challenges faced by landlords. The results of the survey indicated that incoming and outgoing inspections account for 72% of this admin, followed by maintenance (62%), vetting of potential tenants (40%), lease renewals (34%), legal procedures (31%), evictions (29%), and deposit disputes (24%).
As a result of the time-consuming nature of these tasks, the survey results showed that 27% of landlords do not always vet potential tenants, and only 51% of landlords frequently conduct incoming and outgoing inspections.
According to Shevelew, failing to do any of the above can have serious consequences in light of the CPA – particularly as a lease will always be legally interpreted to the benefit of the tenant and will clearly be a dereliction of the duty of the landlord towards his tenant.
“Vetting allows for a landlord to be fairly discriminatory as to the ability of the tenant to pay their rental,” he says.
Shevelew explains that thoroughincoming and outgoing inspections are essential actions that allow for the deposit to be utilised to cater for any damages to the property during the currency of the lease – except for fair wear and tear.
As the CPA affords the tenant such comprehensive protection, it is in the interests of the landlord not only to ensure that they fulfil their obligations to the tenant comprehensively, but also to ensure their own protection.
Rentshield, a new “zero deposit” product, launched by Torus Capital takes care of all the legwork that comes with renting property and also protects landlords far more than a traditional deposit would. It provides landlords and estate agents with a comprehensive online tenant vetting facility, and they take care of all incoming and outgoing inspections, at no expense to the landlord or estate agent. Landlords are protected against the stresses associated with residential letting, including non-payment by the tenant (for up to three months) and repair of the property (up to the value of one month’s rent). Rentshield will also take care of the eviction ensuring that all legal processes are followed efficiently and to the letter of the law, covering the landlord’s legal expensesup to the value of R50 000.
Martin Goodman, Director of Torus Capital, says the legal challenges that come with renting property can prove very stressful for landlords. “Rentshield takes care of the administrative and legal headaches that come with the residential rental market territory.”