It’s not easy to find good and regular paying tenants. Many of them are increasingly becoming aware of their legal rights, often used to stay on a property without paying the agreed-to rent. While these cases are ongoing, the landlord is on a double-edged sword; no rental income and, likely, no chance of evicting the defaulting tenant until the legal case is settled. Worse is that landlords will have to employ the services of a legal representative, which can be extremely costly.
The solution is landlord ‘insurance’. One has to be careful when using the word insurance because in most cases, this type of protection scheme is not underwritten, although it apes insurance. This is better explained by Delf Amm, accountant executive at Landlord Legal, which since 2009, has been providing legal assistance to property owners in the residential (and commercial) rental sector.
“This type of protection covers landlords against the risk of any tenant defaults, such as breach of the lease agreement, illegal tenants, failure to pay rental, and the concurrent expenses of obtaining an eviction order, the legal fees of which can be exorbitant,” says Amm. “These cases are handled by one of our contracted teams of attorneys and advocates who are proven eviction specialists that have handled thousands of successful evictions over the years.”
This legal protection scheme has become increasingly more popular since Covid and the consequential spate of interest hikes that have resulted in many more defaulting tenants. “Estate agents and landlords realise they need a legal route in navigating eviction, and it makes sense to protect themselves by mitigating the risk and ensuring problems that arise in trying to evict tenants through the Courts. Subscribing to this protection against legal costs is an obvious choice for property owners.”
It is noted, however, that this service is only provided to agencies that have a mandate on a rental property, but landlords can direct the agency to take out the insurance on their behalf. If the landlord chooses to directly manage their agreements with their tenants, they will not be eligible to qualify for the scheme.
“Those that are registered have the peace-of-mind that they do not have to spend valuable time in the legal process because we facilitate the entire journey until an eviction order is granted by the Courts. We also minimise the administration side and, as part of the package, offer free access to legal advice to agencies on any property rental-related matter.”
The monthly subscription is a usually fixed fee, which at Landlord Legal, is R198 per month, and this is irrespective of the rent that the tenant pays. There is, however, a three-month waiting period with any new tenant, but this can be waived for landlords/agencies with existing agreements and if the tenant has been in good-standing during the waiting period.
Amm explains that the rental agency continues to undertake the screening and vetting of tenants but must keep those records, which may be invaluable when a dispute arises. When it does, landlords instruct the agency that has the mandate on the rental property, to make a claim for all legal fees pursuant to any tenant eviction.
“There is no cap on the legal fee costs, nor a limit on how often a claim can be made. Only in rare instances, if a summons needs to be issued for outstanding rent, bearing in mind that the deposit usually covers most of the lost rental, will there be an additional cost. If the services of a sheriff are required, those costs are also for the landlord,” says Amm.
Once all documentation has been submitted to Landlord Legal and if in order, one of its panel members is instructed to start legal proceedings. The agency is kept fully informed of the progress of the case. “We pride ourselves on building two-way partnerships with estate agencies managing properties,” says Amm, “working together to mitigate the financial risk that landlords face today.”
