July 7, 2017
“The effect of PIE is not and should not be to effectively expropriate the rights of the landowner in favour of unlawful occupiers. The landowner retains the protection against arbitrary deprivation of property. Properly applied, PIE should serve merely to delay or suspend the exercise of the landowner’s full property rights until a determination has been made whether it is just and equitable to evict the unlawful occupiers and under what conditions.” (From judgment below)
Buy-to-let property can be an excellent investment.
Just take into account the possible difficulty, cost and delay of evicting a defaulting tenant – or indeed any unlawful occupier – who refuses to budge. The problem of course is that you have to keep on paying all your property expenses whilst the legal processes grind their way slowly, painfully and expensively through the courts.
It is however an entirely manageable risk if you take steps to do so upfront, and if you have factored it into your initial calculations.
A recent Constitutional Court judgment illustrates.
An expensive 4 year court battle; and counting …
- An investor used the proceeds of his pension to buy an apartment block from a close corporation in liquidation, intending to spend over R3m on upgrading it for leasing out to tenants.
- The building was however already occupied by 184 people (men, women and children), most of them either low income earners or unemployed, and some of them with long histories of occupation (up to 26 years).
- When they refused to vacate, the liquidators and the investor approached the High Court for an eviction order, which was granted – supposedly by agreement with the occupiers, who at that time had no legal representation.
- The occupiers – by now represented at no charge by a human rights organisation – made a succession of failed attempts to have the eviction order rescinded in both the High Court and on appeal to the Supreme Court of Appeal.
- The Constitutional Court however rescinded the eviction order and sent the matter back to the High Court for further investigation.
- The practical position therefore is this – 4 years down the line, the investor is still fighting for vacant occupation. Litigation like this doesn’t come cheap and whilst the occupiers carried no legal expenses, the investor ran out of money and in the end had to rely on his attorneys to represent him pro bono (free of charge).
- The Court found on the facts that “there was no legally effective and informed consent by the applicants when the eviction order was granted against them”. More importantly, it held that in all eviction applications – even where occupants consent to an eviction order – the court must still investigate whether there has been compliance with PIE (the Prevention of Illegal Eviction From and Unlawful Occupation of Land Act).
- And that ruling – from our highest court – raises the risk factor for landlords, as we see below.
When homelessness is a risk, factor in more delay and cost
PIE requires, as the Constitutional Court put it, that a court only makes an eviction order “after having considered all the relevant circumstances and satisfying itself that it is just and equitable to do so”.
And, said the Court, “An order that will give rise to homelessness could not be said to be just and equitable, unless provision had been made to provide for alternative or temporary accommodation.”
The High Court should therefore have joined the local municipality into the court action, it being the municipality’s duty to provide temporary emergency accommodation. The potential for further delay and cost is obvious.