Beware of the ‘phantom’ landlord

Pam Golding Properties in the Western Cape Metro region cautions consumers to be aware of what may be termed the ‘phantom’ landlord.

“Regrettably, and particularly of late, I have come across an increasing number of scams or would-be scams perpetrated on aspirant tenants,” says Dexter Leite, Pam Golding Properties rental manager for the Western Cape Metro Region. “This is not only to the detriment of the potential tenant, who is then significantly out of pocket, but also damaging to the legitimate rental property industry, which is subject to regulation by the Estate Agency Affairs Board (EAAB).”

“While there are variations to the scam, the sequence of events which unfolds is generally along the following lines. ‘Ghost’ rental agents or agencies advertise residential properties to let via websites or print media. These are usually pegged at well below market-related rentals, with the units situated in popular apartment blocks or schemes. This has the result of inducing would-be tenants to pay so-called deposits and rentals, and sign bogus lease agreements quickly - on the basis that the tenant believes he or she is competing with a number of other tenants for the same property.”

“Having signed the lease, the tenant returns it to the bogus agent, who ostensibly has it signed by a ‘phantom’ landlord, upon which event the tenant parts with their money, never to hear from the ‘agent’ again and not having secured any real right to the premises. In some cases the deposit and first month’s rental are ostensibly paid without a lease having been signed by the parties, and ostensibly to ‘secure’ the premises.”

“In some instances the bogus agent cites the actual owner of the property as the landlord,” says Leite. “This scam is also perpetrated by someone acting or purporting to be the landlord, in other words there is no estate agent involvement.”
He says in order to ensure that would-be tenants do not fall foul of these scams, it is advisable to check that the estate agent and agency you are dealing with actually exists, that they are registered with the EAAB, and that they hold a valid Fidelity Fund Certificate.

“If it sounds too good to be true, ie the rent is too low for the property, it probably is and you are then advised to proceed with caution! It is best to engage the services of a reputable estate agent.  Then verify that the agent you are dealing with is in fact linked to the agency that they claim to represent, by calling the agency or checking the agent’s credentials on the agency’s website.

“Insist on viewing the premises before committing to anything and on meeting the estate agent in person whenever possible, unless of course you know you are dealing with a credible estate agent. If you are unsure who you are dealing with, ask whether the agent is registered with the Estate Agency Affairs Board and if necessary verify this online on the EAAB website.”

He says when in doubt, do not proceed until you are certain and satisfied in all respects regarding the tenancy on offer.

“If you are dealing directly with a landlord, ensure that the person is the owner of the property – alternatively ensure that the owner’s representative is duly authorised to enter into the lease or that the person has a real right to the property and is thus able to let it. 

“Remember to ask for proper identification. Estate agents have a legal obligation to ’know their client’ and have to comply with the Financial Intelligence Centre Act (FICA) in this regard, so they are compelled to identify and verify their client, namely, the landlord (and, if applicable, the person authorised to act on their behalf), thereby mitigating the risk. PGP advocates that the estate agency should also, as part of their processes, identify ownership of the property and act as necessary, depending on the specific circumstances.” 

He says the process becomes somewhat complicated when the property is registered in the name of a juristic entity, for example, a company or a trust, where tenants entering into a lease may not have access to the information required when assessing such ownership and authority of the person representing the owner entity. 

“A further challenge is that someone with a real right to a property, such as a tenant, can legally sub-let the property if authorised to do so by the owner. If this is the case, verify such authority and that the sub-let may subsist for the intended period.”  

“Finally,” says Leite, “do not pay deposits, rental or any other amounts until you have a lease signed by landlord and tenant with due regard to the above.”

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 22 Jun 2018
      The rental market in many Johannesburg suburbs has shown encouraging signs of revival this year but it remains a competitive market and landlords who best cater to their market’s needs will reap the healthiest returns.
    • 22 Jun 2018
      Home design is constantly evolving to reflect the changing needs of society. We look at some of the ways in which our use of space is changing.
    • 22 Jun 2018
      While estate agents can help the seller with correctly pricing the property and marketing a property to the right pool of potential buyers, at the end of the day it’s the impression that the property will make on buyers that counts the most.
    • 21 Jun 2018
      Anyone who’s ever been involved in a building project that’s gone wrong will appreciate the importance of adequate insurance cover in the construction industry.
    • 21 Jun 2018
      A recent news story about a blind tenant caught in a legal battle with his body corporate over letters and notices he was unable to read and consequently comply with has raised the question: what are the legal obligations for landlords with disabled tenants?
    • 21 Jun 2018
      A trend that’s taken the world by storm in recent years is that of hygge (pronounced: hue-guh), a Danish concept that is about creating intimacy, connecting with loved ones and taking pleasure in small, ordinary things.
    • 20 Jun 2018
      Buying or selling real estate isn’t as easy as it is portrayed sometimes, especially if there is a death of a party during the transaction which can make it awkward, tricky and inconvenient.
    • 20 Jun 2018
      With interest rates remaining at historic lows and banks continuing to compete for mortgage finance business, first-time buyers with funds at their disposal are currently well-placed to gain that initial foothold on the property ladder, particularly in the light of the slightly lower growth rates currently experienced in residential property values.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us