Can you rehabilitate a delinquent tenant? Credit Bureau FAQs
So your tenant hasn’t paid … what are the tools and the legalities that you need to follow to speed up your collection process? In our most recent System Training, we received so many excellent questions that we are sharing them for everyone’s benefit!
What are the requirements for blacklisting a delinquent tenant?
There are 3 requirements to load a blacklisting on a tenant:
- The tenant must be in arrears for 3 consecutive billing cycles.
- 20 business days must have passed from your notification to the tenant that they are in breach before you can load a blacklisting.
- The Letter of Demand must include a warning of the adverse effects to the tenant’s credit record should they fail to make payment.
Do you blacklist all the tenants on a lease agreement? Yes.
Can you blacklist a tenant for unpaid utilities? Yes.
Can you blacklist for damages only? You cannot blacklist your tenant for damages only, you can only blacklist for rental and utilities. Through the TPN System you are able to blacklist a tenant on both TPN and TransUnion.
Can you blacklist a tenant more than once? No, you only get one opportunity to blacklist a delinquent tenant. If the blacklisting is removed, it cannot be re-listed further down the line.
Can you blacklist a tenant who has vacated? Yes, you can blacklist a tenant for an agreement that has ended. But, make sure that you do not blacklist for prescribed debt which is debt older than 3 years.
How long is a TPN blacklisting valid for and what happens if the tenant has not cleared the debt by then? A blacklisting reflects on a tenant’s credit profile for 12 months. If the tenant has failed to remedy in terms of the outstanding amount and the amount is less than R20 000, you can approach the Small Claims Court to obtain a Judgement against the tenant. If the outstanding amount exceeds R20 000, you need to approach an attorney to obtain Judgement which is valid for a period of 30 years.
Can you see if a tenant has been handed over to an attorney on a business credit check? Yes, you can. The letter L = handed over.
If a tenant is under debt review, does it show up on a credit check? Yes, it does display that a tenant is under debt review.
Do you need consent to perform a Pre-Assessment Check? A Pre-Assessment check is not a credit check, so you do not need permission to perform one.
Is the KYC enquiry required for private landlords dealing directly with tenants? A landlord does not need to be FICA compliant. It is only required in circumstances where you are an accountable institution according to the Act which applies to estate agents.
Letters of Demand
When should you send the Letter of Demand if the tenant did not pay on the 1st of the month? If the rental is due on the 1st of the month, and it is not paid and cleared on the first, you should be issuing your Letter of Demand on the 2nd of the month. Similarly, if the rent is due on the 15th and payment is not received, you can send your Letter of Demand on the 16th.
Is it better to send a Letter of Demand via registered post? A registered Letter of Demand provides a slip that serves as proof that the letter was sent and when it was sent. If you have a domicile clause in your lease agreement that provides an email address, the TPN Letter of Demand allows you to log on to the Letters tab on the system and obtain proof of the date and time that the letter was sent via email.
What happens if you send a 7 day Letter of Demand and not a 20 business day Letter of Demand for a fixed-term lease with a natural person, and the tenant still does not pay? The time period is of utmost importance here. You have taken the necessary first step by placing your tenant in breach, but you must wait the full 20 business day period before you can cancel the lease agreement. It is important to note that you only have an illegal tenant once you have sent a Letter of Cancellation. So, step 1 is sending a Letter of Demand, step 2 is sending a Letter of Cancellation and only then do you have an illegal occupant.
What is a reasonable time to give a tenant to vacate the property after sending a Letter of Cancellation? You need to apply your discretion of reasonableness for the time you give the tenant to vacate. If you go into the next month, however, you will be creating a tacit lease agreement with the tenant.
For more insights and advice from the TPN Legal Team, watch the full System Training here:
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