Landlords authorised to terminate supply of electricity to non-paying tenants

Posted On Wednesday, 29 April 2015 09:39 Published by
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The Western Cape High Court found in favour of a landlord who was owed in excess of R300 000.00 by a tenant due to the non–payment of electricity bills.

Michelle Dickens TPN

The Court’s order, to the surprise of most, was to disconnect the electricity supply to the tenant. TPN Registered Credit Bureau weighs in on the judgment.

The case in question is that of Anva Properties CC and one of its tenants. Anva, the landlord, owns a building in Cape Town, and pays the City of Cape Town directly for the electricity supply to the building. The landlord then recovers the costs relating to the supply of electricity from its tenants, at a pro - rata amount. The tenant in question had not paid its electricity bill in months, and as such the landlord was essentially subsidising the tenant’s business.

The problem the landlord faced was that if it did not keep up-to-date with the full electricity account the City of Cape Town would disconnect the supply to the entire building, thereby prejudicing the rights of the other paying tenants. The judge in the end held that the landlord was authorised to terminate the supply of electricity to the premises occupied by the tenant and that the tenant could, under no circumstances, reconnect the supply.

“So what exactly does this mean for landlords and rental agents? Can you now finally take the law into your own hands and punish those frustrating, non-paying tenants by flicking the switch and keeping them in the dark?  The answer is still a resounding no,” confirmed Michelle Dickens, MD of TPN Credit Bureau. “You cannot disconnect a delinquent tenant’s electricity of your own volition - under any circumstances. You need to approach the Courts and obtain a Court order first, as the landlord successfully did in this case.” 

Dickens continued to state that “However, importantly, what this judgment has shown us that the Courts are in fact beginning to consider the economic implications of non–paying tenants and the plight of landlords effected by such non-payment. The fact that the judgment is a High Court Judgment makes it all the more powerful. With all of the legislation out there favouring the tenant, it’s comforting to know that should you, as a landlord, need to approach the Courts for relief, there is now a chance that the judge may find in your favour.”

An even better option is for you to potentially save yourself the financial and emotional implications of having to go to court by vetting your tenants prior to signing any lease agreement. “The foundation of any investment in real estate is a quality tenant - without this your property can land up costing you far more than it’s worth,” concludes Dickens.

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