This blog post is for the landlords. It is for the landlords with tenants who aren’t paying rent but refuse to move out. Being a landlord in a position like this can be especially frustrating. It is essential to act within your rights, because if you don’t, you could be stuck with the defaulting tenant for even longer!
The question we specifically want to look at in this post is whether you can turn the electricity off for a defaulting tenant. A recent court case has looked at this question.
The case dealt specifically with a commercial occupier (one renting property for business purposes as opposed to renting for residential purposes). Residential occupiers enjoy extra legal protections to commercial occupiers. The ruling therefore does not precisely apply word-for-word to landlords of residential premises. Nevertheless, the principles from this case could to some extent translate and be of some help to landlords of residential premises.
Defaulting Tenant: The Case
The High Court recently heard this case. A landlord leased a portion of its building to a nightclub business owned by a close corporation. The landlord paid electricity for the entire building to the municipality. The nightclub and other tenants would then refund the landlord according to their electricity usage. The nightclub fell into arrears (over R300 000). At this point, the landlord asked the High Court for an order that allowed it to cut the defaulting tenant’s electricity supply. The reason for this was that the landlord needed to mitigate its damages. Also, if the municipal account was not paid, the electricity would be cut for the whole building and the other tenants would then be prejudiced.
As it turned out, the Court found that the lease was not valid. In spite of this fact, the Court granted the disconnection order, which allowed the landlord to cut the electricity. The Court found that the building owner was effectively subsidising the nightclub’s business and this could not be allowed to continue.
Defaulting Tenant: The Take-Home Lessons
What lessons can you, as a landlord (of residential or commercial property), take out of this case?
The first lesson is that you should not try and take the law into your own hands by cutting off the defaulting tenant’s electricity yourself. Doing so would be unlawful and your tenant could apply to court to stop you from doing this. This would put you in the wrong, waste your time and expose you to unnecessary costs, both legal and in damages. You would end up further from a solution at this point compared to when you started.
The second lesson to take home is to take immediate advice from your attorney on approaching the Court for assistance. The process of realising your rights might be lengthy, and there are no guarantees that the Court will actually allow you to cut the electricity. The facts of the case were unique. The lease was not actually valid and so the nightclub was not a tenant, the arrears related directly to the electricity, and the case involved commercial occupation, not residential occupation. If the facts of your case do not exactly match up to the previous case then it is not guaranteed that the previous case’s rule can be applied to your case.
The final lesson that you, as a landlord, can take home is that preventing such a situation is far better than trying to cure something that has happened. Protect yourself. Ensure your lease is properly drawn up and do all the necessary background checks on potential tenants.
If you are a landlord and are experiencing issues with a defaulting tenant, please do not hesitate to contact us at [email protected].