More and more property owners who lease out their properties to tenants are preferring prepaid utility installations over those that are levied at the end of each month after consumption. It does seem that this has been driven by the desire to protect the financial interests of the landlord over anything, whilst at the same time it necessitates a measure of responsibility and discipline on the part of the tenant. Indeed pitfalls often arise against landlords who still use pay-after-use utility installations especially when the tenant falls into arrears.
What are the rights of the landlord under such circumstances? What can be done? In South Africa, the laws surrounding these situations are particularly noteworthy.
In this article, we share a few principles regarding such situations.
Prepaid utility installations are preferred by more landlords because they prevent situations where there are outstanding arrears on the utility account of the property, whilst the advantage to the tenant is that they pay as they use and offers an opportunity to be in control of their consumption. Ultimately, there won’t be an electricity or water bill at the end of the month. This model aligns well with the Electricity Cut Off Laws South Africa, ensuring a fair deal for both parties involved.
On other properties however, utilities such as water and electricity are levied at the end of each month after the utility authorities have taken a meter reading and calculated the bill of cost. Consequently, the bill varies from month to month according to consumption. In this way there is always an imminent risk in that when the tenant experiences financial challenges and is unable to settle the monthly bill, arrears will start to accrue. In the unfortunate event that the tenant loses employment, there is a probability that he/she will secure other employment only after several months or years, in the meanwhile arrears keep on increasing as long as the tenant continues to reside on the property.
The scenario above poses a real risk to the landlord’s interests because the utility authorities may elect to take legal action against the landlord for the recovery of the outstanding arrears, as the property belongs to the landlord and not the tenant. This is more so owing to the fact that there is no contractual relationship between the tenant and the utility authority, the buck stops with the landlord and comes with a lot of challenges.
The question that becomes important is, what can the landlord do? This is not a question that can be answered with a simple Yes or No, if our case law is anything to go by. The foremost principle that we have to emphasize firstly, is that ‘taking the law into one’s hands’ is not allowed under our law. There are institutions that are mandated by law to adjudicate on disputes in various areas of law, complete with procedural mechanisms to achieve that. It follows therefore that a landlord may not arbitrarily ‘cut off’ a non-paying tenant from the grid willy-nilly, but that justifiable circumstances must be present that rationalise such an act. The difficulty lies in proving and justifying such circumstances. As case law has shown, merely alleging that the tenant has failed to pay the utility bill is not enough defense against an application for spoliation, should the tenant apply for one.
In the case of Anva Properties CC v End Street Entertainment CC the Court allowed the disconnection of electricity by the landlord because the Court found that the landlord had not only shown good cause, but had laid a factual basis and presented sound reasons for such disconnection. The court also held that it had been shown that the landlord may suffer irreparable financial harm if the disconnection is not effected, all while there is little chance of recovering the arrears and therefore the main reason for such disconnection was to cut losses.
Similarly, the approach in Zungu v Nilgra Flats CC (2017/4419) was followed in the case of Eskom Holdings SOC Limited v Masinda  ZASCA 98 where the Court held that the supply of electricity emanated from a transaction of purchase and sale between the parties, which is neither related nor puts paid to an entitlement to the supply of electricity in the exercise of one’s control or possession of a property. In that regard, the Court declined to uphold the spoliation order of the High Court.
We advise parties to seek professional legal assistance when confronted with situations like these, as things may turn out bad when one eventually decides to take the law into their own hands. The arbitrary termination of utility services often leads to emotions running high, leaving the dispute to spill into the courts which may cost a lot of money for both parties, monies which could have been used to settle the very same arrears that are the subject of the dispute.
We assist with rental housing disputes, leasing and property contracts as well as a wide array of other matters as outlined on our interactive website. Kindly make contact with us for comprehensive and professional assistance.
The information contained in this site is for informational purposes only, and should not be construed as legal advice on any subject matter. One should not act nor refrain from acting on the basis of any content included in this site without seeking legal or other professional advice. The contents of this site contain general information which may not reflect current legal developments or address one’s situation. We disclaim all liability for actions one may take or fail to take based on any content on this site.
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