This week the Property Poser experts field a query from a reader who rents out her second property for a minimal monthly amount, provided that the tenant maintains it to a habitable standard.
Despite the negligible rental, the reader says the tenant pays irregularly and has made changes to the property without her consent.
The tenant is now claiming that the owner owes him money, based on the improvements made, and she would like to know what her remedies are.
Since it appears that there is no written agreement between the parties, we will consider the common law relating to the situation, says Brian Kinnear, principal of Fresh Lifestyle Properties in East London.
“There is a distinction between so-called useful and luxurious improvements on the one hand and necessary improvements on the other.”
While the first can be removed by the tenant (provided this is done without causing damage), the second cannot, says Kinnear.
“In the latter instance, the tenant could claim compensation, which is calculated on the value added to the property by the improvement or the actual expenditure, whichever is the lesser.”
Kinnear says the reader has not specified what kind of changes the tenant made to the property.
“The landlord is obliged to maintain the dwelling in compliance with all ordinances, health or safety regulations, and other laws.”
Therefore, if the tenant made repairs that qualify as necessary maintenance, for which the landlord should be responsible, he may well be entitled to reimbursement for the money spent, says Kinnear.
“Should compensation not be excluded by means of a contract, which seems likely in this case, the tenant may have a claim based on the landlord being unjustifiably enriched.”
It is a principle of our law that no person should be unjustifiably enriched to the detriment of another, says Grant Berndt from Abdo & Abdo Attorneys in East London.
“A tenant who has improved a property with the owner’s consent by installing, say, built-in cupboards, could reasonably be entitled to compensation when the lease expires.”
Berndt says the owner may be entitled to the improvements, but not without paying compensation, as this would arguably constitute unjustified enrichment.
“While a lease is not required to be in writing, an instance like this highlights the advantages of concluding such an agreement.”
According to Berndt, the contract could have made provision for this very situation, thereby eliminating any confusion as to what monies may be owed by one party to the other.
“A useful starting point would be for the landlord to establish the nature of the improvements and the extent thereof.”
Berndt says she should arrange for an inspection of the property and improvements by giving the tenant reasonable notice of her intent to do so.
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