The logical first step to obtain redress after a tenant defaults on its rental obligations is to contact them within 24 hours and council them as to reasons for the default. In any event a letter recording the default and the discussion regarding the rectification of the late payment should be sent within 48 hours.
Depending on the outcome of the initial discussion the default should be managed on a daily basis until resolved. If payment has not been made within 96 hours of the due date the tenant should be notifed of the landlords intention to invoke the breach clause in the agreement. They must be reminded that in the event that the breach is not resolved it could result in the tenant being evicted. Once the late payment extends beyond 120 hours the mater should be handed over to an attourneys to begin recovery proceedings and to finalise the notice of breach as soon as possible. The attourneys will in all likelihood send the tenant a letter of demand requesting the immediate payment of all rental owed. In some situations, for example, prior to instituting claims in the Small Claims Court, a letter of demand is a necessary prerequisite to issuing summons for the recovery of rental. However, regardless of whether it is legally required, there are several reasons to always issue a letter of demand prior to instituting litigation:
- In many situations, the threat of legal proceedings may be enough for the tenant to simply pay the amount owed. Alternatively, it may lead to them contacting you to work out payment arrangements and a plan for them to vacate the premises. In either case, the expensive and time-consuming process of litigation is avoided.
Even if the matter is not resolved by issuing the letter of demand, there are important cost consequences to consider. In the case of Havenga v Lotter, 1912 T.P.D. 395 it was noted: “It is perfectly true that a person who feels aggrieved may take out a summons immediately. He need send no letter of demand; but if he omits to send a demand, and a tender is made upon the summons, then he is not entitled to the costs of the summons”. Therefore, if you want to recover the unnecessary costs you had to incur prosecuting your action against the tenant, a letter of demand will often be a prerequisite to such right of recovery. Now, having stressed the importance of a letter of demand, the question arises as to how to go about actually drafting the letter of demand? In almost all cases, it us recommend that an attorney draft the letter of demand, following a full and analytically involved review of the dispute. While other entities, such as debt collectors, may claim to offer the same service, there are several drawbacks to employing the services of anyone other than a qualified attorney to assist:
- The only person who can institute litigation on your behalf and represent you in a court of law is a qualified attorney.
- A letter of demand coming from someone without this power, such as a debt collector, would not carry the same level of seriousness, especially to a clever tenant which knows the real limitations of the debt collectors powers of recovery.
- There are often numerous strategic and legal issues to consider when drafting a letter of demand, even if the matter appears on its face to be fairly simple. For example, an attorney, after having reviewed the lease agreement and after having considered the law, would be able to advise you on additional options, such as – for example, cancelling the lease agreement and re-claiming occupation of the leased premises – as well as various other issues, such as the potential to assert a hypothec over the tenant’s property. Tenants also often come up with a myriad of defences and reasons why they are not obligated to pay rent.
- A qualified attorney will be able to quickly sift through these and determine whether they have merit or not. Aware of the superior knowledge a qualified attorney has, a tenant will definitely think twice before relying on unsupportable arguments.
- The purpose of the letter of demand is to obtain the most favourable settlement for you. A qualified attorney, with a thorough knowledge of the law, coupled with excellent analytical skills, is more likely than anyone else to be able to draft a letter of demand which convinces a defaulting tenant that it is in his interests to settle the matter immediately without having to go through the legal process.