The Consumer Protection Act - Part 2
As well as being a writer, I am also a photographer, one of those individuals who stands back, separated from the action by my lens, observer rather than participant; neither hero nor villain, but rather he who observes and records both heroism and villainy alike. The following joke, that comes complete with the warning that some have found it offensive, illustrates this aspect of the photographic profession perfectly. (even if it does refer to old technology)
“If you saw a man drowning and you could either save him or photograph the event … what kind of film would you use?”.
Most serious photographers, on hearing this joke, will either burst out laughing, or actually start discussing the merits of different photographic equipment for this situation. In other words, we photographers are so “callously” focused (pun intended) on capturing the image that it becomes more important to us than life itself. Is this true? Occasionally, yes, as can be seen in many a photographer's endangerment of his/her own life and limb in order to “get the shot” in war zones and other dangerous situations. Photographers often are “callous” observers. Am I proud of this image? In a strange way, yes.
Firemen are heroes, doctors overcharge, lawyers are dishonest, and artists are dreamers. The only people more boring than accountants are actuaries, sales-people will do anything for money, and policemen are intellectually slow. Over the years, just about every profession, or line of work, has acquired its own “joke persona”, or image in the minds of both the public and its own practitioners. In most cases, the people within a particular industry proudly repeat the jokes that make fun of them and their profession, proudly owning their “negative” stereotype. On some level, there is a sense of pride in having such a clear and recognisable identity in the mind of the public, even if there are apparently negative undertones. It is better to be recognised negatively, than to not be recognised at all. Of course these images, and the jokes that they inspire are blatant stereotypes. Obviously, many, if not most of the people in each of these professions do not match their industry's particular stereotype. I know many wonderfully ethical lawyers, accountants that are into extreme sports, doctors that work for next to nothing, and photographers that have sacrificed the shot of a lifetime to save a life. But, somehow, no matter how many honest lawyers, interesting accountants, sane postmen, or intelligent policemen we meet, the stereotypes remain. What's more, it seems that we only have to meet, or hear of even one person that matches their professional stereotype in any way for that image to be confirmed and even more deeply ingrained in our consciousness. Of course the person that told us the lawyer/accountant/doctor joke, was probably our lawyer/accountant/doctor, and in telling the joke, they once again strengthened their personal and public professional identity.
Well believe it or not property managers, your hour of recognition is upon you, and not just in the form of a puny (or punny) joke or two either. No, you and your profession have been recognised by none other than the government of South Africa. In fact, you have received more than one special mention in the new Consumer Protection Act (CPA); pages and pages of special mention and recognition. Of course, if you think back to my first article on the CPA (Be Careful What You Wish For), you'll remember that wish-fulfilment can be a very risky business. You've received the recognition that you wished for, but at what price?
Jeremy Wagner, rentals manager at Lew Geffen Sotheby’s International Realty, has been quoted as saying, "It [CPA] protects tenants to unjustifiable and unheard of lengths," and, ".. the CPA .. could prove disastrous for the rentals market ..”. (Consumer Protection Act deal (sic) landlords a poor hand. Article in the George Herald, 23 December 2010)
So, what price have property managers and landlords paid for their recognition, for their moment in the sun? What terrible legislation could have prompted the dire pronouncements that I've quoted above?
Well first of all, the CPA provides ultimate protection for the consumer by over-riding any other law that offers the consumer less protection than that provided by the CPA. Furthermore, the CPA states that where there are conflicting laws or rules regarding supplier and consumer, it is the law that provides the most protection to the consumer that must always prevail. Of course, while your consumer persona is embracing this whole-heartedly and jumping for joy, your supplier persona, your property manager or landlord persona, is whimpering quietly in a dark corner in the foetal position.
As if that is not bad enough, according to the CPA, a lessee is permitted to withdraw from a lease on only twenty business days notice. Of course, the landlord or property manager is permitted to levy a “reasonable cancellation penalty”, but the CPA does not specify, or provide guidelines that define a “reasonable cancellation penalty”. This leaves such penalties open to legal challenge by ex-tenants, along with all the accompanying legal costs and problems involved in collecting money from absent ex-tenants. In other words, property rental no longer gets any special treatment in terms of contractual law. While this may well make life easier for tenants, it removes much of the security that was previously afforded landlords and property managers. Additionally, to rub salt into this already painful wound, landlords and property managers may not terminate a lease unless there has been a "material breach". Even then, the tenant must be afforded a twenty working day opportunity to remedy the breach before the rental agreement can be terminated.
Even if a lease agreement contains an “option to renew”, the landlord must still ascertain, four months prior to the termination date of the initial fixed period, whether the tenant wishes to renew the lease or not. In such a case, the choice remains entirely with the tenant. Furthermore, lease agreements are now limited to a maximum timespan of twenty-four months. If neither the lessor nor lessee cancel the lease in writing at the end of the initial fixed period, the current lease agreement is automatically extended on a month-to-month basis. In such a situation, the tenant may still leave on twenty days notice, while the landlord must give a minimum of forty days notice. Many property management experts are understandably nervous regarding the repercussions of these new laws relating to the removal of “undesirable tenants”.
As for lease agreements themselves, they must now, by law, be written in plain language so that any ordinary class of consumer is able to understand them. This means that all lease agreements must be easily understood without undue effort, in terms of the document context, the organisation involved, the vocabulary used, and even the use of headings and illustrations.
This might very well mean that personalised lease agreements, rather than standardised ones will become more commonplace in future. In a country such as South Africa, where there are nine official languages, and numerous other “first languages”, this also introduces further challenges regarding document translation. Can a potential tenant easily understand the content of a legal agreement that is not in written plainly in their first-use language? Is this a possible legal loophole that needs to plugged before it can become a problem? The massive differences in educational levels among the South African population also present considerable challenges in drafting lease agreements that will stand legal scrutiny in light of the CPA.
Voetstoots, the concept of accepting goods or services on an as-is basis, generally applies to sale rather than rental agreements. However, pseudo-voetstoots clauses are sometimes included in rental agreements in an effort to escape maintenance or repair costs on a rental property, or otherwise in an attempt to limit the legal rights of the tenant. While tenants have always had recourse to the Rental Housing Tribunal in such matters, not many tenants have previously been aware of their rights in such cases. Now, the CPA places considerably more legal weight behind a tenant's recourse for remedy in such matters. The CPA states that consumers have a right to receive goods and/or services that “.. are reasonably suitable for the purposes for which they are generally intended; are of good quality, in good working order and free of any defects; will be useable [sic] and durable for a reasonable period of time, having regard to the use to which they would normally be put and to all the surrounding circumstances of their supply..”.
Rental properties are not excluded from this definition of goods & services, and must therefore meet these criteria. Furthermore, the CPA states that a landlord may not “.. make any false, misleading or deceptive representations (by words or conduct) thereby inducing a consumer to enter into an agreement with him/her. ” If it is found that a landlord has included pseudo-voetstoots clauses in a lease agreement, or not fully disclosed the true state of repair, ownership, or in any way attempted to limit the rights of the tenant, parts or even the whole lease agreement could be void.
Now, before you start thinking about a career change, let me assure you that not all the news is necessarily bad.
Firstly, CPA legislation only applies to “natural persons” as opposed to “juristic persons”, which include any type of registered business, company, trust or association. These legal entities fall outside of the scope of consumer protection provided by the CPA, and so, I suppose can still be considered fair game. The CPA exists only to provide protection to the ordinary “man-in-the-street” consumer, like yourself.
Secondly, it is very likely that professional organisations such as the Rental Housing Tribunal will apply for industry-wide exemption due to the fact that they already administer a scheme, similar in scope to the CPA, within the residential property rental industry. While this may not result in complete exemption, it does raise the possibility that aspects of the CPA will, in the future, be modified to better suit the property rental industry.
Finally, if you think back to my first article in this series on the CPA, you may remember that although we are suppliers of goods and services, we are also simultaneously consumers of various goods and services. While it may be only natural to think of one's own industry as exceptional and thus deserving of exception when acts such as the CPA are promulgated, it is not a logical expectation. It is good to remember that as much as your inner landlord may fear and hate the CPA, your inner consumer is simultaneously rejoicing.
Is the CPA going to necessitate change within the property rental and management industry? Most certainly so. Are some of these changes going to incur added cost? Almost definitely. However, the questions that you should be asking yourself are ones such as these: Will simpler, easy to understand lease agreements benefit honest landlords and tenants alike? Of course they will. Will increased honesty and transparency be beneficial to the property rental and management industry, especially in the long-term? Honesty is always beneficial, within any industry. Is it probable that the CPA could produce better landlord-tenant relationships in the future? I'd be surprised if it didn't. If the tables were turned and you were tenant rather than landlord, would you feel more positive about the CPA? I'm sure you would.
Property rental and management has long managed to exist and function largely underneath the radar. For many years, landlords have enjoyed legal advantages, and a relative lack of scrutiny not afforded suppliers in other markets. Now change is in progress, and change is always unsettling to one degree or another. As someone who, in regard to property rental, is a consumer rather than a supplier, I believe that honest landlords and property managers will not be affected negatively by the CPA, especially in the longer term. Yes, it will be costly and inconvenient to have your lease agreements rewritten in simple language, but the overall effect will be greater levels of honesty, transparency and trust within the property management industry. (The third, and final article on the CPA to follow in the next article will deal more generally with what is needed for suppliers to be compliant with the CPA)
Author: Robin Bownes.