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Wednesday Nov 28, 2012

Tenant's bill is property owner's liability

eThekwini municipality joined some of the other municipalities in introducing a change to its credit control and debt collection policy as of July 1.

The new policy makes owners directly responsible for municipal accounts for electricity and water services. Tenants are no longer allowed to maintain an account in their names.

Owners of properties now have a consolidated account in place for rates, water and electricity. Tenants do not have access to copies of the owners' accounts and pay the service charges on presentation of the municipal bill by their landlords, if these charges are not included in the rentals.

A tenant has the legal right to examine the original consolidated municipal bill before paying the landlord.

A tenant may refuse to make payment if the bill is not available for scrutiny. This is similar to the tenant legally entitled in terms of the common law to withhold rental payments if the landlord fails to issue receipts.

Since July 1, several tenants were seriously inconvenienced when their landlords failed to pay the monthly consolidated bills, resulting in disconnection of services on the properties they occupied.

The disconnection was either due to the landlords failing to pay for the debts incurred on their properties occupied by their tenants, or on some other properties the landlords own.

Such is the power of a consolidated account that burdens tenants when the landlords' municipal debts are not paid on properties not even occupied by their tenants.

Tenants who entered into leases prior to July 1 continue to have municipal accounts in their names unless the landlords maintained the accounts.

Recently, a landlord was extremely distressed that his tenant moved out without settling a huge municipal bill of R84 000.

The tenant had entered into a lease agreement prior to the new municipal policy which allowed the tenant, on presentation of a copy of the lease to the city, to operate an account in his name for water and electricity consumption.

The landlord received no answer from the city for permitting the account to run into arrears for so long without disconnecting the services.

Owners and landlords must be vigilant irrespective of a city's policy relating to service charges. When a landlord enters into a lease, he is in some way conducting a business. He must not only concern himself with the rental income, but also the prompt payment of expenses on the leased property.

Where the tenant pays the municipal charges, the landlord should request a copy of the monthly bill so that he can keep track of the tenant's payment.

In the Mkontwana v Nelson Mandela Metropolitan Municipality and another 2005 (1) SA 530 (CC), the Constitutional Court's judgment held that the owner was responsible for all outstanding amounts regarding consumption charges due to the local authority, even if the account was in the tenant or non-owner occupier's name.

Judge Zak Yacoob held that the city ought to keep an accurate record of the amounts due for services, saying "...a municipality would know if the amounts outstanding are unreasonably high and it would be theoretically possible for the municipality to keep the owner informed.

"The practical implications of a municipality assuming a responsibility of this kind are considerable. Additional resources and processes need to be put in place.

"The other side of this coin is that owners are, or ought to be, in a position to care for their property, keep in touch with occupiers and monitor the occupation and use of their properties.

"These considerations point to a conclusion that a municipality should not be required to furnish the owner of property with information on a continuous basis for the law to be procedurally fair.

"Owners also complain, however, that municipalities refuse to provide information even if they are requested to do so. There is no basis for this refusal. The owner has an interest to know how much is owing and a municipality is obliged to provide the information if requested to do so."

A landlord must conduct regular inspections of the water and electricity meters to establish if the meters are recording accurately and if the tenant has tampered with it.

Late payments or disconnections are indicators that ought to alert the landlord, and a clause in the lease that these would constitute a breach will help secure the landlord's rights.

Sayed Iqbal Mohamed
Chairperson, Organisation of Civic Rights
Tenant Issues
Daily Mail


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