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What happens to my deposit if my landlord fires his rental agent?

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Q

Hi, I am currently renting a property in the Amanzimtoti area of KwaZulu-Natal. I have been in the property for 18 months and when I moved in a rental agreement was signed between a local estate agent and myself. The initial contract was for six months, and this was renewed for a further six months.

The contract has not been renewed after the second renewal period and it is being handled on a month-to-month basis. My rent is up to date and has been paid on time every month and the owner lives in Thailand.

At the end of February the estate agent cancelled the agreement/contract between the agency and the owner due to complaints by the owner around non-performance of the agency in respect of payments to the local metro for rates, among others.

I found an agency in the area with a good reputation and referred them to the owner, but it seems that there will not be an agreement between the agency that I referred and the owner as he won’t accept their monthly rates/fees.

As far as I am aware he is not talking to any other agencies at this time.

My deposit is still being held by the previous agency.

I have four questions

#1 Where do I stand in respect to my deposits? The previous agency is holding one month’s rent and a “key” deposit for the water account. The water account is in advance from what I can see, but we were not provided regular statements on this so I don’t really know what the situation is. There was talk initially that my deposit would be transferred from the old agent to the prospective new agent, but the prospective new agent stated that they would prefer that the deposit be refunded to me and then I pay across to them.

#2 With the cancellation of the contract between the old agency and the owner, should the deposit not automatically be refunded as they are no longer representing the owner?

#3 What happens or what should I do at the end of this month with regards to payment of the rental? Keep paying to the previous agency or hold onto the rent until the owner clarifies a contract with another agency?

#4 What is my legal standing right now in respect to my occupation in the house? Do the normal legal rental policies still apply (one month’s notice from either side etc)? – Gareth


My landlord wants to move back in


A

Hi Gareth, I refer to the queries and wish to advise as set out below. For the sake of convenience, I have used your respective questions as a heading for my answers.

#1 Where do I stand in respect to my deposits? The previous agency is holding one month’s rent and a “key” deposit for the water account. The water account is in advance from what I can see, but we were not provided regular statements on this so I don’t really know what the situation is.

The fact that the landlord has terminated his agent’s mandate does not mean that you are in danger of losing your deposit. Ultimately, the landlord is accountable to you and must refund your deposit (less any amounts that may be deducted for the purpose of reinstating the premises to its pre-lease condition) upon expiry of the lease.

Thus, it is the landlord’s prerogative to ensure that your deposit is properly invested in an interest-bearing account, and it is his duty to ensure that you are refunded upon expiry of the lease.

Should the landlord fail and/or refuse to refund you as required, his conduct would amount to a contravention of the provisions of the Rental Housing Act, and you would be entitled to either:

  • Sue the landlord for repayment of your deposit out of the Magistrates’ Court; or
  • Institute proceedings against him in the Rental Housing Tribunal, which may then direct the landlord to refund your deposit.

I note that the latter of the aforementioned options would invariably be the quickest and most cost effective means of resolving any dispute pertaining to the refund of your deposit.

#2 With the cancellation of the contract between the old agency and the owner, should the deposit not automatically be refunded as they are no longer representing the owner?

The fact that the owner has terminated his erstwhile agent’s mandate does not entail that your deposit should automatically be refunded to you.

In this regard, it must be borne in mind that the deposit serves as security for any potential damages to the property, and is therefore only refundable upon expiry of the lease. Thus, the landlord is fully entitled to continue to hold the deposit (albeit that this is currently done through his erstwhile agent) until such a time as your lease comes to an end.

As set out above, the landlord is obliged to refund your deposit upon expiry of the lease, and remains wholly accountable for your deposit. I therefore reiterate that you are not in danger of losing your deposit.

#3 What happens or what should I do at the end of this month with regards to payment of the rental? Keep paying to the previous agency or hold onto the rent until the owner clarifies a contract with another agency?

With regard to payment of your rental, I would not suggest withholding payment pending receipt of instructions from the landlord. I would recommend erring on the side of caution and contacting the owner so as to ascertain where and how rental is to be paid going forward.

Kindly note that any instruction (to pay rental) received from the owner must be in writing so as to ensure that you are protected in the event of a dispute.

#4 What is my legal standing right now in respect to my occupation in the house? Do the normal legal rental policies still apply (one month’s notice from either side etc)?

The status of your lease is not affected by the landlord’s election to terminate his agent’s mandate. Thus, your lease agreement will continue to subsist on a month-to-month basis, and will be terminable on one calendar month’s written notice on the part of either party to the agreement.

The fact that the landlord has ended his contractual relationship with his agent has absolutely no bearing on the contractual relationship that subsists between the two of you.


Got a burning legal question? Email david@hometimes.co.za and we’ll be sure to assist you


Who is Marlon Shevelew?

Marlon Shevelew, director of Marlon Shevelew and Associates.

Marlon Shevelew, director of Marlon Shevelew and Associates.

Marlon Shevelew is the director of Marlon Shevelew and Associates Inc. a law firm specialising in rental property, contractual, consumer and company law. The firm is the recipient of more than 45 international property law awards. Marlon is current author of PayProp’s rental documentation and preferred rental property attorney to the Institute of Estate Agents South Africa (IEASA), the Rental Housing Tribunal Western Cape and presenter of the Advanced Residential Property Law Seminar endorsed by the University of Cape Town. Marlon has featured on Cape Talk 567 and Property Matters on DStv, contributes as a guest expert to several property publications and was invited by Juta to write a book on rental property law, by LexisNexis Butterworths to edit its forms and precedents on rental property law and, on no less than three occasions, was invited by the Law Society of South Africa to lecture and train candidate attorneys and attorneys on rental property law. Marlon also created the unique Rental Retainer ClubRentDoc  and LevyDoc which offers clients affordable legal fees for rental property and sectional title related matters. Marlon is contactable on marlon@marlonshevelew.co.za anytime for more information on these services.

 

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