PROPERTY: Securing Arrear Rentals
Recent Western Cape Business News
LANDLORDS battling with sloppy, late-paying tenants and bodies corporate struggling to retrieve levies can now welcome two recent landmark decisions by the Council for Debt Collectors that clearly rule property managers collecting arrear levies and rentals fall within the scope of the Debt Collectors Act and set out debt collection charges due when rentals and levies fall into arrears.
In terms of the rulings, estate agents and property managers collecting arrear rentals and levies must now be register with the Council for Debt Collectors. That decision also regulated the penalties and charges due on late rentals or levies including recoveries for telephone, debt counseling and collection commissions through the need to comply with the Debt Collector’s Act.
Hence, the decision regulates any unscrupulous behaviour that had been infiltrating into various sectors of the debt collector industry.
Andrew Schaefer, MD of residential letting, insurance and property management group Trafalgar, says the move has highlighted compliance with the Council for Debt Collectors and associated legislation as being necessary for compliance and transparency. He believes the onus will now also shift the paradigm for late payers to improve their personal administration to avoid enforceable penalties.
Trafalgar is already seeing an improvement in payment timing as a result.
Bodies corporate require a trustee resolution to raise interest charges on arrear levies and trustees are urged to attend to this housekeeping item to ensure interest charges are enforceable and collected.
The Council for Debt Collectors was established to bring clarity to a previously unregulated industry following numerous public complaints laid with the Department of Justice against debt collectors.
The Debt Collectors Act provides control over debt collectors and legalizes the South African collection system by monitoring their conduct and professionalism and thus promoting a culture of good governance.
“The Act works both ways, as tenants who believe they are receiving unfair bias can lay a complaint with the Council and both sides will be heard before a judgment is passed,” Schaefer says.
Schaefer says a recent decision by the Durban High Court to exclude levies from the National Credit Act debt counseling process is also sound news for estate agents and property managers. That decision means companies such as Trafalgar do not have to refer to debt counselors when seeking levies due from owners – and correspondingly that errant owners cannot hide behind debt counseling as an excuse for not paying their bodies corporate levies.
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