Need to Know ...
WHAT IS AN INSPECTION?
A property inspection is an examination (done before, during and after a lease agreement) that details a property’s condition so that the interests of both the lessor and lessee are protected.
An inspection is necessary to fully document the state of a rental property rented by a tenant before he or she is required to pay a damage deposit. The inspection documents the state of the property on occupation and again once it’s vacated, allowing parties to identify if any damage was done during the tenant’s tenure. Thus, the cost of damages can be fairly deducted from the tenant’s damage deposit.
Various inspections can be done during the the tenancy to monitor the state of the property, and assess if any maintenance is required.
There are various types of property inspections, namely:
Ingoing inspections: when the tenant is about to take occupancy of the property.
Midterm inspections: any time or multiple times during the tenancy to assess that the good state of the property is being maintained.
Pre outgoing inspections: occur just prior to the tenant’s lease culmination to ensure that any damages during the tenancy are logged. These inspections also ensure that the tenant is aware of what they need to attend to before vacating the property.
Outgoing inspections: when the tenant is vacating the property.
Why inspections are important:
Property Inspections may seem like a lot of work, but they’re crucial in protecting the interests of both landlords and tenants.
Firstly, South African legislation (governed by the Rental Housing, Unfair Practices Regulations and Consumer Protection Acts) dictates practice around inspections and the refund of the damages deposit.
When a property is rented, The Rental House Act stipulates that an agreed-upon, documented ingoing and outgoing inspection must be undertaken by both landlord and the tenant, or their assigned representatives.
It further stipulates that a damages deposit must be paid by the tenant prior to occupation.
BUT WHAT DOES THIS MEAN FOR ME?
Landlords/agents, not doing a proper inspection means that you may have no legal recourse should your asset be damaged. You won’t be able to withhold any deposit and interest in the event of damage to your property, and you’ll have to absorb repair costs yourself.
Midterm inspections allow the landlord/agent to intervene early if there is any breach or damage by the tenant. This can prevent unpleasant situations from escalating further. Similarly, mid term inspections allow tenants to highlight any maintenance or damage that should be attended to by the landlord.
WHEN TO DO AN INSPECTION?
Thorough inspections need to be done at check-in and check-out, at the very least.
Check-in: before a new tenant takes occupancy of a property, a joint inspection must be done. This can occur between landlord or agent and the tenant, or between the parties’ representatives.
Mid-term: this is ideally done half way through the tenancy agreement in order to monitor the state of the property and attend to any maintenance required to keep the landlord’s asset in good shape. This inspection is far quicker, and is necessary to document any obvious damage or pressing maintenance requirements.
Check-out: around 4-6 weeks (and no less than 3 days) before the lease is due to expire, a joint outgoing inspection must be done with all relevant parties (or their representatives) present. In this inspection, parties must determine if any damage has been done, and who is responsible for the fixing thereof.We recommend 4-6 weeks because the tenant is then given enough time to address any damages that are their responsibility. Ideally, the property will be returned in much the same state that it was received – however, one should take into account fair wear and tear or maintenance issues that fall out of the tenant’s jurisdiction.
A final, quicker, check-out inspection should be done once the tenant has vacated the property at the expiry date stipulated by their lease.
NB: give your tenant sufficient warning and allow them enough time to prepare for your inspection.
Deposits protect the landlord’s interests by providing security to cover any damage caused by the tenant. A deposit is the amount of money, from the tenant, that is held by the landlord as security to cover any property damage beyond normal wear and tear at the end of the tenancy. In South Africa, deposits are usually between one and two times the monthly rent amount.
The tenant’s deposit must be held in an interest bearing account by the landlord or letting agent.
Upon the expiry of the lease the landlord must pay the deposit, plus interest, less any deductions, to the tenant.
The rate of interest must be equivalent to a savings account rate, regardless of the rate obtained by the landlord.
Written proof of the interest accrued on the deposit must be provided by the landlord if requested by the tenant.
RETURNING THE DEPOSIT
IF THERE IS NO DAMAGE TO YOUR PROPERTY
If you’re lucky enough to have great tenants who have kept your asset in good condition, you need to reimburse them with their full deposit (with interest) within 7 days of expiration of the lease.
IF THERE IS DAMAGE TO YOUR PROPERTY
Should your property have some damage that your tenant is attending to, you are obliged to reimburse their deposit (with interest) within 14 days after restoration of said property – granted no outstanding amounts are owed to you in terms of the lease.
IF YOUR TENANT HAS NOT ATTENDED TO DAMAGED PROPERTY
If, 21 days after expiry of the lease, your tenant hasn’t responded to your request to inspect the property you, as landlord, may (without detracting from any other right) deduct the reasonable cost of repairing damage to property and replacing keys from the tenant’s deposit and interest.
Unfortunately, not all landlords and tenants see eye-to-eye when it comes to check-out time. In the case of a dispute, make sure you do the following:
Go to an attorney if the matter requires it.
In less serious instances, present your case to the Small Claims Court for disputes not exceeding the amount of R15000.
Contact The Rental Housing Tribunal. If a case officer can’t mediate and resolve the dispute it will go before the tribunal for settling. In the case of a dispute, make sure that you always prepare concise, relevant evidence to argue your case. Include date and time stamped pictures (with confirmation signatures) as these provide the best evidence. Document all communication between the landlord/agent and the tenant – as this indicates to the tribunal that you have tried to resolve the issue yourself to no avail.
Whether you’re a landlord or a tenant, it’s important to educate yourself on South African legislation surrounding rentals.
THE RENTAL HOUSING ACT
Chapter 3 Clause 5 (3)(c) & (d) refer to the payment of a damages deposit
Chapter 3 Clause 5 (3)(e) refers to the ingoing inspection
Chapter 3 Clause 5(f) refers to the outgoing inspection
Chapter 3 Clause 5(g)(l) refer to the conditions attached to the refund of the deposit as well as permitted deductions from the deposit the Rental Housing Tribunal (include contact details for national RHT)
THE UNFAIR PRACTICES REGULATIONS
Clause 4(1)(a)(i) & (ii) refers to the condition of the property at the commencement of the lease agreement
Clause 4(1)(b)(e) refer to the maintenance and repairs for which a landlord is responsible as well as the provision of services
Clause (6)(1)(d) refers to when the rented property can be entered by the landlord or his representative
THE CONSUMER PROTECTION ACT
Clause 53 refers to defects and repairs
Clause 54 refers to the tenants’ rights to quality service and no defects in a property
The Rental Housing Act requires a landlord to include certain information in the lease agreement which is listed in Chapter 4 Clause 5(6) Maintenance clause.
Your maintenance clause should detail clearly what areas of maintenance the tenant is responsible for, and which areas of maintenance the landlord is responsible for. This will also determine who is responsible in the event of damage.
RENTAL HOUSING TRIBUNAL
If you have a residential dispute and feel that you are not being treated in a fair manner, you can contact the Rental Housing Tribunal in their province. A representative will investigate the complaint, hear both sides of the dispute and they are empowered to make a final ruling which are binding on both parties.