According to the Cape Town Community Housing Company (CTCHC) a beneficiary gets into arrears once they do not pay the required instalment on the contractual payment date.
If the instalment remains outstanding for more than seven days a telephonic reminded is done. If the arrears amount remains outstanding for more than 30 days an official notice in terms of section 129 of the National Credit Act (NCA) is sent.
If the client fails to remedy the breach within the NCA prescribed notice periods a cancellation notice letter is sent.
The cancellation letter informs the client that the sales contract has now been cancelled and that they should make arrangements to vacate the property.
Another 30 days’ notice is allowed for the voluntary vacation.
Once the 30 days’ notice expires the client becomes an unlawful occupant and CTCHC starts occurring damages as a result of the unlawful occupation.
Damages for unlawful occupation equals the loss of affordable rental income the company would have received if the unit was made available for another qualifying beneficiary.
It is only at this stage that the company proceeds with legal action which could include an application to the court in terms of the Prevention of Illegal Eviction (PIE) Act. This is with the intent to obtain physical possession of the property in order to re-sell the property to recover the debt.