When you first realise that your tenant has not paid the rent, it can be daunting to start the debt collection process. The risk of collecting the full outstanding amount from a delinquent tenant is stressful to take on - the best first step is to send a Letter of Demand as soon as the breach has been committed, and to ensure that a legally correct and lawfully compliant Letter of Demand is used when kicking off your debt collection.
The TPN Legal Team have set out the necessities of a Letter
of Demand and what needs to be included in that letter to ensure that it is valid and that no time or effort is wasted.
1. Debtor
Details
Your Letter of Demand must be clearly addressed to the
debtor in question. This will include the following information:
- Debtor’s name – the full name and surname of the debtor that appears on their relevant identity document must be included in the letter.
- Full address – you must make sure to include all the necessary addresses that the Letter of Demand is going to be sent to. This typically involves a physical address, postal address, or email address. It is best to include all the applicable delivery addresses to ensure that the debtor receives the letter.
- Your own details – you will need to include your own details (full name and contact details) so that the debtor understands exactly who is demanding the outstanding amount.
2. Arrears amount
The full amount that is outstanding at the time of sending
out the Letter of Demand must be demanded within the letter. This will
include the amount written in numbers as well as words to avoid any confusion
or ambiguity when it comes to what exact amount is being demanded. Without this
information, the debtor is not aware of the total amount payable and will
render your Letter of Demand invalid and unenforceable.
What can you send a TPN Letter of Demand for? Arrear rental,
outstanding utilities, or unpaid levies in the property sector, and unpaid school fees in the education sector.
3. Time period for outstanding amount to be paid
Depending on if section 14 of the Consumer Protection Act
(‘CPA’) is applicable to your particular lease agreement, there are specific
time periods that must be provided to the debtor to pay their outstanding
amount in order for it to be a valid demand letter.
- If the CPA does apply to your lease agreement, then you are obliged to provide 20 business days for the debtor to pay their outstanding debt.
- If the CPA does not apply to your lease agreement, you are only obliged to give the debtor 7 calendar days to pay their outstanding rental.
We have prepared an easy-to-read and simple guide to determining which Letter of Demand to use in a particular situation, you can download it here.
4. NCA compliance - The adverse listing clause
A fantastic debt collection method is the loading of an
adverse listing on a debtor’s credit profile due to non-payment of the
outstanding debt. However, there are certain requirements that must be met
before you can adversely list a debtor – these requirements can be obtained
from our Guide to Adverse Listings.
One of these requirements is that a Letter of Demand must be
sent, and contained in that letter is a warning that should the outstanding
payment not be received within the time period demanded, it may result in their
credit record being adversely affected.
This clause is vital to include in your Letter of Demand
because if it has been omitted, and should you then require the debtor to be
adversely affected, you will need to send out a new Letter of Demand and start
the entire process over again.
Note: No prior written consent is required to load
adverse listings.
5. Consequences of non-payment
Your Letter of Demand must include the specific consequences
of non-payment and must reference that if the full payment is not received,
then the relevant legal action will be instituted against the tenant. This
could include eviction proceedings or arrear collection proceedings, such as the
institution of a summons for the collection of the outstanding rental. This
warning as well as the warning detailed in point 4 above sets the expectations
going forward if no payments are made and gives the debtor the necessary alert to avoid legal action and pay their outstanding amount.
Courts across South Africa have accepted the TPN Letters of Demand
and Letters of Cancellation as binding documents to rely on for any legal
action, provided that the right letter has been sent. This eliminates the
pressure of drafting a valid letter by providing you with a completely
compliant Letter of Demand sent directly from the TPN system at an affordable fee.
Get your outstanding debt collection processes started the right way! Visit our website or call 0861 876 000 to get started.
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