Tenant in a pickle due to closed trust account

A reader would like to know the way forward after the bank account of a family trust was closed, resulting in him being unable to pay his monthly rental.

The trust, which was originally registered in English, but was later altered to Afrikaans, has undergone several amendments over the years.Some amendments were effected in English and others in Afrikaans. The reader has had financial and legal difficulties in recent years and it would appear that the trust became the source of funds when he rented a dwelling. Due to all the amendments, he says the bank account was closed, apparently because the letters of authority of the trust were issued in Afrikaans. Having fallen into arrears with his monthly rental, he has taken the matter up with the banking ombudsman, but the landlord is threatening to evict him.

Schalk van der Merwe from Rawson Properties in Somerset West says it seems unlikely that a bank would close or suspend an account in such an instance, both languages being officially recognised. “Any hint of impropriety could probably have been resolved by providing the bank with a full paper trail of the amendments to the trust,” he says.

“Our reader has provided us with a copy of the lease, which is of a pre-printed type with open spaces for insertion of party-specific detail.” He says the rental amount is set out in the lease, but no mention has been made of the fact that a third party is responsible for the payment of the rental on behalf of the reader. “Our reader tells us that the landlord is aware of the problems but it can only be considered cold comfort as his difficulties and non-payment merely translate into difficulties for the landlord.”

Van der Merwe says while many landlords are in a position to tolerate the financial difficulties of their tenants, not all of them can do that.

“It is unreasonable to expect that an issue of a personal nature has the same meaning and impact on an unrelated person with whom one only has a commercial-type relationship,” he adds.  “This being said, our reader says the matter is with the ombudsman and is expected to be resolved in less than three months.” If the reader decides to remain in the premises despite the landlord’s desire to evict him, Van der Merwe says the landlord would have to take formal steps.

“This, quite probably, will take longer than the three months envisaged to resolve the matter through the ombudsman.”

Grant Hill of Miller Bosman Le Roux Attorneys in Somerset West says, should the matter be resolved, the reader will possibly be in a position to effect payment of the arrears. “In that instance, the lease could continue should there be no other reason to proceed with cancellation,” he says.

“From the perspective of the landlord, the involvement of a third party to a lease should be recorded.”

Hill says the third party – in this instance the trust – appears to be the party actually renting the dwelling for our reader and should have been recorded as the tenant.

“The trust could also have been recorded as a surety for the obligations of our reader.” Hill says either of the above could have provided the landlord with a little more scope for legal steps and it makes one wonder whether the involvement of the trust was disclosed to the landlord upfront. An offer to purchase is attached to the lease agreement, he adds. “The offer is signed in blank, which means no purchase price has been included, but the parties have initialed alongside the space where the price is to be inserted. “The offer is of the pre-printed format and various other areas for completion also remain blank, but the parties have initialed alongside those areas.”

Hill says this practice is highly undesirable and lends itself to potential abuse. “The lease references an option to purchase but does not reference any provisions related to that,” he adds. “One would, for example, expect a mechanism dealing with the manner in which the purchase price is agreed in the event of the tenant wishing to take up the option.”

Again, says Hill, we are reminded of the importance of properly recording all relevant provisions in a well-drafted and considered agreement. “Consulting an attorney in this instance prior to the conclusion of the lease could have resulted in the proper recordal of the position in the best interest of both parties.”