LANDLORDS AND TENANTS: THE "LIGHTS OUT" RISK In whose name should the electricity account be for leased premises? The choice is with the landlord, in that most (possibly all) municipalities won't allow a tenant to open an electricity account without the landlord's written consent. Giving such authority as a landlord may reduce your admin burden, but it carries a risk - if the tenant runs up arrears, ultimately you will have to foot the bill, and tenants have been known to abscond leaving very large debts behind! Conversely, where the electricity account is in the landlord's name, the tenant is at risk because - per a recent High Court decision - the municipality has the right to cut off electricity to tenants if the landlord falls into arrear. This is in contrast to the right of access to water, which is constitutionally guaranteed (strengthened by statutory protection against disconnection "if this would endanger the health of the residents, and if they are unable to pay for the service"). Bottom line - there is a fundamental right of access to water but not to electricity; electricity supply is always at risk. Critically, the Court held that the disconnection of electricity could take place without any notice to tenants, putting them at risk of a very nasty (and possibly expensive) "lights out" surprise if your landlord - for any reason - fails to pay an outstanding account. Landlords and tenants should ensure that leases protect both parties against default by the other. As an alternative, consider pre-paid meters; they literally put "power" - or the lack of it - directly into the tenant's hands! (N.B. Disconnection directly by the landlord is unlawful! This case relates only to disconnection by a municipality.) Recent Articles for May 2009;
|
 |