Landlords are rich: fact or fiction?

My husband and I own rental property. Each time one of our flats comes up for rent, we show the unit to a horde of people and never cease to be amazed at their expectations and criticisms.

We aren’t slum lords…we have three units on a spacious property with a shared pool. There is parking behind a security gate. We pay the electricity, water, and trash for all three units. When we bought the property we spent 10% of our original 800K+ purchase price upgrading and renovating the property, including new carpeting and paint.

We have a mortgage on the property and, because in this country there is no such thing as a fixed rate mortgage, each time the prime rate goes up, so does our payment. The electricity rates were just increased by 34% and our mortgage payment went up five times in the last 12 months. We raise rents only when a lease is being renewed and our lease allows us to raise it up to 10%. Despite the increases in our mortgage repayments and the increase in the cost of electricity, when our last tenant signed his lease renewal, we raised his rent only 2.5%: our economy is shrinking, he’s a good tenant, and we don’t want to lose him.

Why would we do that? Well, an empty flat generates no income and we depend on the income from the rents to pay the mortgage. The two larger flats must be generating income in order to keep us from digging into our own pockets to make the payments. Good tenants are harder to find than bad tenants…and bad tenants cost us a lot of money in repairs, lost rent while a flat is being repaired, and even legal fees. We are motivated to keep a good tenant who pays his rent on time and keeps his flat and garden in good order, so we made his rent increase minimal so he doesn’t feel like he can’t afford to stay on.

Do people honestly believe that, because we own a rental property, we are rolling in money? And even if we were, why should our affluence mean a renter can destroy the flat or demand the outrageous? Surely the guy who owns the local luxury car dealership has a few coins to rub together…does that mean he should lower the prices on his cars for you or me? So why do people seem to think that because the landlord drives a Mercedes, he has plenty of money and it’s ok to trash the place because, after all, he can afford to fix it?

We had to evict a tenant last week for harassing and intimidating the tenant of another flat. He had been in the unit for four months and when we took possession on Tuesday, I reeled from the shock of the condition of the place. What part of “no smoking in the flat” did he not understand? The flat reeked of stale cigarette smoke…and rotting garbage. Yup, the kitchen floor was littered with trash and a black bag emitted the unmistakeable stench of decay. We had the handyman in to do an assessment and the quote we received covered a full month’s rental…seems they somehow managed to put four cracks in the toilet and replacing that will eat up half the deposit alone. In fact, the damages came to 25% more than the deposit will cover…and he was only in there four months!

A previous tenant was upset with us because we would not dance to her tune…how dare we not build her a garage for her BMW (at a cost equal to a full year’s rent)? How dare we expect her to pay her rent on time? How dare we expect her to refrain from smoking, to water the garden, and abide by other terms of her lease? She quit paying her rent, using the money instead to pay for her new rental and lied to us saying her clients hadn’t paid her. When she moved out, she left the flat in shambles, having caused damage more than double the amount of her deposit. Five months of litigation later, she finally paid up (when the Sheriff came a-knocking with papers to seize that BMW and sell it at auction to satisfy her debt), but in that five month period we had to liquidate some investments to come up with the cash to do the repairs and pay the lawyers. Yes, we recovered the legal fees and were reimbursed for the repairs, but our investments…and their returns…were forever diminished.

I am far from an elitist…I’ve been damned poor in my life, which is what motivates me to be as kind to my tenants as business considerations will allow. Good tenants get treated with special care…we want to keep them and it is worth it to us be flexible in dealing with them in order to keep them. But there are people whose expectations are just ridiculous:

One prospective tenant gave us a hard luck story hoping to get us to reduce the rent for her. “Would you consider reducing the rent?” she asked, naming a figure fully 25% below the asking price. “Sure,” my husband said. “Just as soon as the bank reduces my mortgage by that much.” Unspoken by either my husband or me was the concern that, if things in her life were as tough as all that, is she a good risk with regard to us receiving our rent each month?

Another asked that, if she rented both the two bedroom unit and the little studio cottage on the grounds, would we give her a discount on the rents? Her proposed discount would give her the cottage for nearly free…and remember, we pay the full utilities on all the units! She seemed quite unhappy that we wouldn’t go for her plan.

There were the people who said they would consider renting the big flat but only if we would put security fencing around the pool. Sorry, the flat has a fence all the way around it and if you cannot mind your child and keep him inside an already fenced yard, what makes you think a security fence…and my cost, no less…will keep him out of the pool?

Mostly, however, we get people who want something for nothing. They think the rent is too high without bothering to calculate in the amount of money they would have to pay for electricity. They think that they don’t need to take care of the unit or the garden because we have the money to pay for fixing it after they leave. Even if we do have that kind of money, why does it make it OK to damage the property? And what about those screams of indignation when they hear their deposit is being nicked for pay for it?

If you are one of those people who thinks your landlord is a bottomless pit of money, give some thought to the idea that, if you are late with your rent, he might be late paying the mortgage payment on the property that you live in…and enough of those could see his mortgage foreclosed! Is your landlord slow to fix something? Well, he could be the lazy sod you think he is…and then again, maybe he has to wait for payday to be able to buy the materials to fix the thing that you broke.

But he drives a Mercedes, you wail…his wife wears fine jewellery…they live in an expensive neighbourhood! So what? What does that have to do with your obligation to pay your rent on time, abide by your rental agreement, and maintain your unit? Landlording is a business, it is not a social connection or a charity. If you don’t uphold your end of the bargain, you can make it difficult…even impossible…for your landlord to hold up his.

To expect a person to spend hundreds of thousands of dollars on a property and then allow you to live there for next to nothing is simply not reasonable. Your landlord most likely has a mortgage on the property you live in and he needs your rent in order to pay it. If you think your landlord is a rich, greedy old SOB who can afford to wait for your rent until you feel like paying it, or who can afford to fix the things you so carelessly damage, you’re probably wrong. He has a budget and cashflow considerations, just like you do, and depends on your rent money to make sure the mortgage on your home is paid each month.

WE WON! Tenant from Hell Update

The magistrate has found in our favour with regard to Lynda's destruction of our property and her back rent. At this point, a judgment has been issued in our favour and we have instructed our attorneys to proceed with collection.

Unlike America, where you can get a judgment but are your own when it comes time to collect, the law here provides for the sheriff to immediately seize the movable assets of the debtor. Lynda has dragged her feet for almost ten months...we've been in litigation for five months...and during this entire time she has paid only R5000, an amount slightly more than what she claims her her total indebtedness to us, never mind that just her past-due rent is almost twice that amount!

So, we have instructed our attorneys to instruct the sheriff to get on with his business...with the roofing and water heater disasters of the past two months...not to mention both cars breaking down...we need that money! Her damages to the property we covered out of our own pockets and now it is time to get it back.

I wonder how much the sheriff is going to get for that pretty lavender BMW of hers?

Tenant from Hell, Redux

On 6 June I wrote that our attorneys had informed us that they had “received a call from Lynda’s attorney earlier today requesting the full outstanding balance and our banking details to attend to payment by no later than close of business on Monday, 9 June 2008.” Lynda, you will remember, was our tenant who owes us a boatload of money in past due rent, late penalties, and damages to the flat she rented for two years.

One of the key elements in our battle with Lynda is that she is a hopeless liar. By the time I posted the 6 June blog entry she had promised to pay at least part of the debt we claimed no less than a dozen times, at least twice in writing. Finally, just before we were to go to court, Lynda’s attorney faxed our attorney the above commitment to pay the debt in full.

Well, it was no surprise that 9 June came and went and we didn’t see a centavo. Wise to Lynda’s ways, we didn’t hold much hope of payment and so did not suspend our legal journey. Prior to our next court date Lynda’s attorney, with no explanation or apology for Lynda’s failure to pay on 9 June, again communicated with our attorneys, this time claiming that she could not afford to pay a single lump sum and offering a payment scheme. Lynda was offering to pay a sum weekly until the debt was paid.

Knowing that magistrates often frown on a refusal to accept a reasonable offer of settlement, we declined the offer with the explanation that Lynda had failed to make good on offers of payment in the past and, absent any kind of onerous penalty for failure to make her payments, we had no confidence in her promise to pay. We heard nothing back from Lynda’s attorney and so, after waiting a respectable time, our attorneys filed what is called a “Demand for Plea.” This gave Lynda five working days to submit her plea to the court and should she fail to do so, we could then apply for a default judgement after which her assets could be seized and sold to satisfy the debt.

We waited for ten days for her to submit her plea…basically her refutation of our claims…to the court. After all, this was her very last chance to have a judge look at the claim and maybe—just maybe—let her off the hook. If I was in Lynda’s place, you can bet I would submit a detailed and eloquent rebuttal to the claims, hoping to minimize the amount I would be ordered to pay. To fail to respond at all is to just give the judgement to the opposition.

But that is exactly what Lynda did. We gave her ten days instead of the obligatory five, and still she did not respond. And so, on 14 July our attorneys filed for a Judgement in Default of Plea. Yesterday we received, via our attorneys, a fax from Lynda’s lawyer containing yet another offer of settlement: “…2 monthly instalments of R10 000 as from 01 August 2008 and 01 September 2008 provided that the amount be capped at R20 000 and no further interest, costs, etc. are levied.”

I nearly laughed out loud! What on earth makes that woman think we have any interest in accepting any kind of deal from her? It’s over! Only the formalities are left to attend to. She defaulted, we won, so now it is just a question of getting the paperwork signed and her BMW hauled away by the Sheriff for auction. Yes…she drives a late model Beemer and she is a 35% owner of a lucrative employment agency…it’s not like we are trying to take bread out of the mouths of starving babes, here!

And so we countered with an offer of our own: We are in receipt of Lynda’s…offer to settle. In view of the fact that Lynda’s history is one of making agreements to pay and then failing to do so, we are unable to accept this offer. We will counter with an offer of our own: full payment of all amounts owed in a single lump sum. Interest, costs, penalties, etc. to stop at the moment her payment clears the bank.

The more I thought about the offer, the more incensed I became. This has been a power struggle with Lynda almost from the day she moved into the flat. She actually expected us to cut down a tree, demolish a significant part of the garden and build a garage for her where the front patio stands! When we demurred, reminding her that she leased the flat knowing it had no garage (but secure parking nonetheless), she darkly hinted that she would remember this when it came time to renew her lease. The fact that it would cost a full year’s worth of her rent to build the bloody thing was apparently unimportant…she wanted a garage and we were somehow remiss in not providing it for her.

She ignored the conditions of her lease that were not to her liking, from confining her dogs to smoking to paying her rent on time to watering the garden. When we pressed her to abide by the terms of her lease she responded with indignation and hostility, as if we were overstepping our bounds! Even on the day she finally left, she determined to do so on her terms, refusing to set an appointment for a final inspection of the flat and even refusing to give the keys to us…she gave them instead to the new tenants!

After she moved out and we sent her the results of our final inspection, she had the audacity to substitute her own thumb-sucked figures for the quotes we had carefully and painstakingly gathered. She stole a down lighter from the dining room ceiling and damaged two electrical outlets in the kitchen, which a certified electrician repaired for us at a cost of R1100: Lynda’s offer of reimbursement was R80…less than the cost of a replacement down lighter kit! She damaged a carpet that was in new condition when she moved in…when she moved out there was a circular water stain at least 20”(50 cm) in diameter and the carpet fibre had rotted. Because there is no spare carpet to make a patch and the damage is highly visible, we must replace the entire carpet at a cost of nearly R2000: Lynda’s offer of compensation for this damage was R80 to have the carpet shampooed!

If we had any concern that her blatant flouting of our legitimate authority was based in some kind of personal animosity, it was laid to rest when she treated the court system in the same manner. Lynda has apparently decided that the courts hold no legitimate authority over her either, and so she simply ignores the rules of litigation. She made commitments to pay us both directly to our attorneys and in writing through her own attorney which she failed to keep and she failed to submit documents to the court by the deadlines. She seems to think she doesn’t have to abide by the rules, that she will make up the rules as she goes along and do things her way.

So, after ruminating about this for a while, I sent an email to Hubby: It occurs to me that Lynda is still trying to run things. She is trying to set the terms of settlement…“2 monthly instalments of R10 000 as from 01 August 2008 and 01 September 2008 provided that the amount be capped at R20 000 and no further interest, costs, etc. are levied.”

“I’ll give you this money but on the following conditions…” is basically what she is saying. What makes her think WE have to bend to her conditions? The court is going to take her car away from her and attach her wages if she doesn’t pay the debt, and every month that this drags on is more court costs and legal fees, both hers and ours. There’s no question now that the judgment will be in our favour and for the full amount we claim because she defaulted.

Does she think we are stupid? Or maybe greedy? If we agree to cap it at R20K and we run up another R10K in legal expenses because she again fails to pay (which I suspect is her plan), we would have to go to court to invalidate the agreement because of her failure to perform, and then we have to start the whole process all over again. Why would she think we would want to stop now when we are now just about at the end of it, and we are winning?

I am sure she is trying to minimize the monthly increase in this debt, but what makes her think we would even consider such an offer? Why would she think, after a dozen or more defaulted promises to pay, we would accept a deal with her, especially one that provides no onerous penalty for her default? She could have been off the hook for half this amount if she had just paid up in the first place. The longer she drags it out, the more it costs her…she is racking up R600/mo in late penalties, plus our lawyer bills and hers as well.

We are still waiting to see if she accepts our counter offer…whether she admits it or not, she doesn’t have much choice in the matter because whether she forks over the cash or the Sheriff seizes her assets and sells them at auction to satisfy the debt, she going to have to pay. The only control she has left is whether or not to allow the debt to continue to grow due to her delaying tactics. Her debt to us, including our attorney’s fees, is now at least R20,000. Additionally, she has her own attorney’s fees to pay.

Does being a control freak feel so good that it is worth this kind of money?

Some people just don’t get it, do they?

We had a tenant for two years who was regularly late with her rent. Sometimes that rent would be six weeks or more in arrears and when it came time to renew her lease a few months back, we were relieved that she declared she was unwilling to do so.

We tried explaining to her that we had a mortgage payment to make on the building in which she lived, and if she didn’t pay her rent on time, we either dug into our own pockets to make up the shortfall or we incurred late penalties from our lender. Did putting late penalties onto her rent make a difference? No, she just ignored them.

Well, now she’s out. The first thing we had to do was have the place cleaned. She claims to have had a cleaning service in, but if that’s true, then she needs to get her money back. The oven took more than an hour (with a spray-on oven cleaner and lots of elbow-grease) to scrub clean, and more than two hours were spent, on hands and knees, getting the stains out of the carpet. And then there were the missing items to be replaced, like the gate latch and the shower drain, and the damaged items to be repaired or replaced, like kitchen door hinges and a mouldy, mildew-stained shower curtain (a fabric curtain that could have been kept clean by the simple expedient of a quick cycle through the washing machine with a bit of bleach).

Finally, there is a mountain of garden debris (hers was a garden flat) behind the garden shed, debris she was warned in writing to remove and to cease and desist from piling there. Always it was, “we’ll get it out next weekend…” Well, next weekend has come and gone and now I have to hire someone to come haul it away and dump it. And it won’t be at my expense, although it will be the lowest cost vendor I can find.

So, she’s been out of her flat for less than two weeks and guess what? She’s calling up and having fits because she hasn’t received her cleaning/security deposit back yet. Seems she needs the money…

Shoe pinches when it’s on the other foot, doesn’t it?