Rental agent rights and obligations

Better understanding the role of a rental agent can make it easier to benefit from renting your property or lodge complaints. Cilna Steyn provides some insights

Persons with disabilities need to rent properties and manage their existing properties that they may want to rent out. There are many challenges with finding properties that will suit their specific needs and, if they are wanting to put their property onto the rental market, it is always daunting as there are so many stories of nightmare tenants and complicated leases with hidden clauses. To assist with these processes one needs to have a good knowledge of the process and good agents.

Like with most professions, the general public has, at best, a very limited understanding of or, at worst, absolutely no idea what a particular profession entails, and the internal functioning of the particular industry. This is no different to the estate agency industry. There are many kinds of estate agents with vastly different rights and obligations.

Sales agent

Among estate agents are the sales agents who focus mainly on the advertising and selling immoveable properties, be this a house, office or any other form of property.

Rental agents

This is an estate agent who focuses on the advertising or “listing” of properties available to buy or rent, finding potential tenants and undergoing the vetting of potential tenants.

Vetting is the process of determining whether the person would be suitable to rent the property and, in doing so, the agent will focus on the potential tenant’s credit rating, potential judgments or defaults against their name, confirmation of employment and income, reference checks with previous landlords and so on. The rental agent will then introduce the tenant (if successful on application) to the landlord and assist the parties to conclude a lease agreement.

Managing agent

This is an estate agent who focuses on sectional title complexes. They assist the members of the body corporate, specifically the trustees, with the day-to-day management of the complex. This will include sending out levy invoices, attending to the annual general meetings, assisting in compiling the conduct rules for the specific complex, and many more functions. Managing agents are vastly different to a sales or rental agent with regards to their functions, rights, and responsibilities, the biggest difference being that they play no role in introducing a tenant/buyer to a property owner.

Value of rental agents

For many property investors, the decision to appoint a rental agent may seem to be an expensive one that scrapes the potential profit from the top of a rental property. This is very often a mistaken belief. Most rental agents have a good understanding of the market, possess the knowledge and resources that could turn your rental property and interaction with your tenant from an absolute nightmare into a long term successful, high-return investment.

Mandate agreement is essential

The document governing the relationship between the landlord and the rental agent is not the lease agreement, as is often assumed, but is in fact the mandate agreement. A lease agreement can never be an agreement concluded between three parties. This agreement is exclusively between the landlord and the tenant.

The mandate agreement is between the landlord and the agent. This is a very important document and many landlords, unfortunately, are reluctant to conclude a written mandate agreement – to their own detriment. The mandate agreement contains the rights and obligations of both parties – a contract clearly sets out what can be expected from the other party and the counter performance for those duties. With this, the risks of conflict and disputes are reduced dramatically.

Obligations and rights

The standard obligations of a rental agent would be set out in the mandate agreement, but the more specific rights and obligations of the parties will differ according to the landlord instructions on either a procurement mandate (placement mandate) or a management mandate.

In a procurement mandate, the agent will advertise, vet and conclude the lease agreement between the landlord and the tenant. This is where the obligation stops. There is no requirement for this agent to do any of the required inspections, invoicing and general administration and management of your tenant.

A management mandate requires the agent to do everything a procurement agent does as well as be responsible for the monthly invoicing of the tenant, handling of the rental deposit, collecting rental payments on behalf of the landlord, attend to inspections of the property as required by the Rental Housing Act No. 50 of 1999 and to take the necessary steps against a tenant who has defaulted on their rental obligations.

That being said, none of these mandates will place an obligation on the agent to attend to the collection of unpaid rental or the eviction of the non-paying tenant. A rental agent also does not have the obligation to attend to the physical maintenance of the property. Meaning, should there be, for instance, a burst geyser or a requirement to repaint the property, the rental agent will only be obligated to arranging contractors under special conditions in the mandate agreement or a separate service level agreement.

As this is clearly a separate instruction, the agents’ remuneration in the form of commission will not cover these special instructions to the agent. To the contrary, the rights and obligations as described above are standard rights and obligations under both procurement and management mandates.

When a landlord would like an agent to attend to duties outside of these standard obligations, the parties would have to negotiate a fee for the work done by the agent. This can include a wide array of things, including attending to the Rental Housing Tribunal on behalf of the landlord, arranging contractors to attend to maintenance on behalf of the landlord and so on.

Once you understand the role of a rental agent and the importance of the mandate agreement, this knowledge becomes a very powerful tool when it comes to appointing a rental agent, which could be a massive benefit in your property investment journey.