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  • 1. Introduction

      • A lease agreement is an essential legal document that should be drafted and completed prior to the leasing of the property.

        It is a contract between the lessor (landlord) and the lessee (tenant) for the rental of property for a fixed amount of money,
        and involves an undertaking by the landlord to the tenant for the use and enjoyment of the property on a temporary basis.

        This article will examine the law regulating lease agreements templates and
        provide a broad legal scope for a better understanding of what is required in terms of lease agreements.

        ___________________________________________________________
        1 Hutchison and Pretorius The Law of Contract in South Africa (2012 ) 6

  • Lease Agreements for every rental contract situation

      • The following lease agreements does not come in a lease agreement pdf format. We provide it rather in a microsoft word doc format (.doc or .docx) lease agreement word.
        This allows you to edit the document as per your requirements.
        Without loosing the text format structure as what will happen if you copy from a pdf template format.

        Lease agreement south africa is created by South African's for South Africans.

        Agreement Of Lease Of A Flat (Basic Version)
        Basic lease agreement for the rental of a flat containing all the necessary clauses

        Agreement Of Lease Of A Furnished Flat
        Agreement of lease of a furnished flat containing all the necessary clauses to regulate the relationship between the tenant and the landlord

        Lease Of A Furnished House
        Agreement of lease of a furnished house containing all the necessary clauses to govern the agreement between the tenant and the landlord

        Agreement Of Lease Of A Garage
        Agreement of lease of a garage where by the Premises shall only be used for the sale, garaging, repair, maintenance and servicing of motor vehicles, the sale of motor vehicle accessories, the sale of petrol and other petroleum products and for purposes ancillary to the motor and garage business and shall not be used for any other purpose whatsoever.

        Agreement Of Lease Of A Share Block Unit
        Agreement of lease of a share block unit containing all the necessary clauses to make a valid lease agreement and govern the leasing.

        Agreement Of Lease Of A Shop
        Agreement of lease of a shop containing all the necessary clauses that will govern the leasing of the premises between the parties. whereby the premises is a shop to be used for commercial purposes.

        Agreement Of Lease Of A Title Flat In A Free-Standing Unit
        Agreement of lease of a title flat in a free-standing unit containing all the necessary clauses to govern the leasing.

        Agreement Of Lease Of A Whole Building As Offices
        Agreement of lease of a whole building as offices containing all the necessary clauses that will govern the leasing of the building.

        Agreement Of Lease Of A Whole Building To Be Let As A Shop Or Trading Store
        Agreement of lease of a whole building to be let as a shop or trading store containing all the necessary clauses that will govern the leasing.


  • 2. The rights, duties and remedies of landlords and tenants1

    • The law imposes a number of rights and duties on the landlord
      which thereby gives the tenant a number of corresponding rights and duties.
      In the event of non-adherence of any of these rights and obligations the law provides for remedies to rectify such breaches.

      These elements will be briefly demonstrated below. 2.



      Rights

      Duties

      Remedies

       

      • Payment of deposit prior to occupation into interest bearing account.

       

       

      • Landlord to furnish tenant with written receipt of deposit.

       

      • Specific performance – the performance of contractual obligations.

      • The tenant has a right to privacy during the lease period. • Landlord and tenant must jointly inspect for any defects/damage to the property.

       

      • Landlord has an obligation to not interfere with tenant’s permissible use of property. • It is the landlord’s responsibility to rectify any defect/damage to the property.

       

      • Maintenance clause in the lease agreement. • Claim for damages where the party has suffered actual monetary loss as a result of the breach; - “Penalty clause”

      • The landlord has a right to prompt and regular payment of rental or other costs in terms of the lease. • The landlord has a right to recover unpaid rental or any other amount due and payable.

       

      • The tenant is obliged to pay the rental amount and other costs; - “other costs” must be indentified in the lease.

       

      • Landlord’s tacit hypothec – landlord obtains a limited real right over the movable goods on the property. • Cancellation of the lease – clause in the lease stating that landlord/tenant has the right to cancel “forfeiture clause.”

      • Tenant has a right to suitable living conditions.

       

      • The landlord is obligated to provide the tenant with a property that is in ‘habitable condition’ (suitable for living.

       

      • Spoliation order – illicit deprivation of essential services (such as water) must be remedied by the court.


      ___________________________________________________________
      1Dr. S.I. Mahomed Landlord & Tenant – Rights & Obligations (2010) chapter 3

  • 3. Categories of leases and the effect of the huur gaat voor koop rule

    • A centuries old common law principle can pose a problem to landlords who need to move into a property they have leased or if the property is sold to someone who does not want to take over the existing lease. This principle is known as “huur gaat voor koop” and can be translated as “hire takes precedence over sale.” Where ownership is transferred and the lease agreement is still in force the existing lessee cannot be evicted by the new owner of the property since the new owner is bound by the lease2. This rule also applies to a landlord who wants to move into the leased property. You can obtain a simple residential lease agreement template south africa here.

      It is necessary to distinguish between the different categories of lease of immovable property, as the protection of the lessee is different in each case.
      There are three categories of lease of immovable property:
      3.1 Short term lease – the lease of property for a term shorter than ten years. The lease and all rights relating to it will be enforced against the new owner who was aware of the contract3. In the event that the new owner was unaware of the lease agreement, the lessee will still be protected on the basis of the huur gaat voor koop rule;

      3.2 Long term lease – lease of property for ten years or longer. The huur gaat voor koop rule applies for the first ten years of the long term lease and no longer. The lessee will also be protected on the basis that a real right is acquired upon occupation of the property;

      3.3 Registered long term lease4 – lease of property for ten years or longer and registered in the deeds office. These leases are enforced against any new owner of the property as a real burden, whether the new purchaser was aware of the lease or not.
      ___________________________________________________________
      2Van der Walt and Pienaar Introduction to the Law of Property (2016) 326
      3 Spearhead Property Holdings (Pty) Ltd v E & D Motors (Pty) Ltd 2010 (SCA)
      4Maphango v Aengus Lifestyle Properties (Pty) Ltd 2012 (CC)

  • 4. The contents of a lease agreement template

    • In terms of our common law there are no formalities required for the valid conclusion of a lease, however, there are certain specific clauses which a lease should contain:

      4.1 the names and addressed of the parties for purposes of formal communication;

      4.2 the description of the property;

      4.3 the amount of the rental;

      4.4 reasonable escalation of the rental amount;

      4.5 the frequency of payment;

      4.6 the amount of deposit, if any;

      4.7 the lease or notice period;

      4.8 information relating to the rights and obligations of the landlord and tenant as set out briefly above;

      4.9 information on the amount of any charges payable in addition to rental.

      Having a written lease in place will ensure proper protection for both the landlord and the tenant.

  • 5. The Rental Housing Act5 (“RHA”)

    • The RHA was created to protect the rights of both the landlord and the tenant, in order to promote and facilitate a better relationship between the parties by clearly and separately outlining the rights and obligations of both parties within the rental housing market.

      However, the RHA has often been criticised for its shortcomings, especially in terms of its enforcement. These shortcomings have been addressed by the enactment of the Rental Housing Amendment Act.6

      The aims of the Amendment Act includes to:-

      5.1 set out the rights and obligations of the tenants and landlords in a coherent manner;

      5.2 require leases to be in writing;

      5.3 extend the application of chapter 4 (Housing Tribunal) of the 1999 Act to all provinces;

      5.4 require Members of the Executive Council (MEC) concerned with housing matters to establish Rental Housing Tribunals in all provinces;

      5.5 extend the powers of the Rental Housing Tribunals;

      5.6 provide for an appeal process;

      5.7 require all local municipalities to have Rental Housing Information Offices;

      5.8 provide for norms and standards related to rental housing;

      5.9 to extend offences.

      The Amendment Act protects both the landlord and the tenant from illegal or unfair practices by the other party, and ensures that the Act is easily understood and legally enforced. It is important to familiarize yourself with the changes made to the RHA and how they affect you as a landlord or tenant.

      ___________________________________________________________
      5 Act 35 of 2014
      6 Act 68 of 2008

  • 6. The Consumer Protection Act7 (“CPA”)

    • In protecting the interests of the tenant the CPA effectively trumps other legislation such as the Rental Housing Act8 . The CPA seeks to protect consumers against exploitation, unfair treatment and unscrupulous business practices.

      It is important to note that the Act applies to a residential lease if the property is leased in the ordinary course of business. If the property owner is regularly receiving an income from renting a property and declaring the income to the South African Revenue Service then the lease will be governed by the CPA. However, the CPA does not apply to a residential lease if the tenant is a juristic entity (such as a trust, company or close corporation).

      The regulations of the CPA prescribe that fixed term agreements, including lease agreements, shall endure for a maximum period of two years. This is unless the landlord is able to establish a ‘demonstrable financial benefit’ to the tenant for the conclusion of a lease period exceeding two years9.
      After the expiry of the initial two year period the lease continues on a month-to-month basis unless and until a new lease is concluded between the parties.

      A tenant who is under the impression that his/her rights in terms of the CPA have been infringed can lodge a complaint with the National Consumer Commission, a Rental Housing Commission, or a provincial consumer affairs court, or approach a Magistrates Court or High Court.

      ___________________________________________________________
      7Act 68 of 2008
      8Section 14 of the CPA
      9Section 14(2)(a) of the CPA

  • 7. Expiry of the lease agreement

    • Not more than 80 business days and not less than 40 business
      days before the expiry date, the landlord must notify the tenant that
      the lease is due to expire and inform the tenant of any material
      changes to the lease if it is renewed or continues after the expiry10. The lease will continue on a month-to-month basis, unless the tenant expressly informs the landlord that he/she wants to terminate the lease on the expiry date, or agrees to renew the lease for a further fixed term.

      Although the section is clear about the notice that a landlord must provide, it does not set a deadline for the tenant to respond to the renewal offer.
      The lease should include a clause that obliges the tenant to respond within a certain period to the offer being made.

      ___________________________________________________________
      10Section 14 of the CPA

  • 8. Termination of the lease agreement

    • Every contract is aimed at full performance by the parties, whether it is a long term lease or even a monthly lease with no termination date, there are mechanisms to bring the agreement to a lawful end.

      The natural way for a contract to terminate is by full performance on both sides or in accordance with the provisions regulating the life of an agreement.
      However, the breach of an agreement by one of the parties may interfere with its natural course and result in early termination.

      The parties may insert provisions into their contract that are designed to regulate the consequences of a breach of the lease agreement11.
      Examples include:

      • A cancelation clause – giving a right to cancel the contract provided that certain procedures are followed (written notice of intention to cancel unless the breach is rectified).

      • A penalty clause to obviate practical difficulties in proving damages;

      • An acceleration clause – making the outstanding balance of debt immediately due and payable;

      The tenant may cancel the lease with 20 business days notice, without the need to prove that there was a breach of the agreement12.
      Regardless of the reason for the cancellation of a fixed term agreement the tenant will remain liable to the landlord for any amounts owed in terms of the lease up to the date of cancellation.
      The regulations of the CPA entitles the landlord to impose a penalty as compensation for the rent lost as a result of the cancelation, but it cannot be so large as to deter the tenant from cancelling the lease.

      Regulation 5(2) provides for factors that can be taken into account when calculating the penalty which includes:
      the rent owing for the remainder of the lease, the rent paid until the date of cancellation, the term of the lease, and the potential for the landlord to find another tenant. The penalty can be determined when the lease is cancelled,
      and the size of the penalty will depend on whether or not the cancellation results in the landlord incurring loss.
      ___________________________________________________________
      11 Hutchison and Pretorius The Law of Contract in South Africa (2012) 311
      12Section 14 of the CPA

  • 9. Lease agreements and Covid-19

    • The South African common law principle of supervening impossibility of performance caters for situations where performance in terms of the contract has become impossible due to unforeseen circumstances after entering into the contract.

      The parties are then excused from performing the terms or obligations of the contract which have become impossible to perform.

      A reasonable person must be objectively unable to perform due to circumstances that are unavoidable and not the fault of either party.
      The current covid-19 pandemic and the national lockdown are considered valid reasons for non-performance.

      Lease agreements generally contain exclusion clauses for purposes of excluding certain claims or liabilities which normally lie in the hands of the contracting parties.
      These clauses generally state that upon giving written notice to the other party, the relevant obligation will be suspended during the continuance of the inability caused and such party will be relieved of any liability during such period.

  • 10. Conclusion

    • Landlords and tenants needs to carefully consider the wording of each clause in their lease agreement in order to be certain of their contractual obligations.

      Tenants must caution against simply withholding rent payments as this may inadvertently result in a contractual breach.

      A balance has to be struck between preserving the rights of the tenant against the rights of the landlord.


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