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LEASE AGREEMENTS IN SOUTH AFRICA

What is a Lease Agreement?

A contract of lease is a reciprocal agreement in terms of which one party (the landlord) undertakes to give the other party (tenant) the temporary use and enjoyment of a thing, wholly or in part, in return for the payment of a sum of money or a share in the fruits of the property, generally referred to as “the rent”.

Thus, the essentialia of a lease agreement is:

  1. The thing to be leased (the property);
  2. The time or term of the agreement;
  3. The rent to be paid in return for the use of the property.

It is of essence that all three of the above requirements be included in a lease agreement in as much detail as possible. Thus, one has to clearly state the amount payable for rent, the detailed description of the property to be leased as well as the duration of the lease agreement, for instance, whether it will be monthly or for a fixed term of 12 months

What is the applicable legislation governing Lease Agreements?

In part, lease agreements are regulated by various acts, the most prominent being the Rental Housing Act 50 of 1999 (“RHA”) and the Consumer Protection Act 68 of 2008 (“CPA”).

The most apparent distinction is that the RHA regulates month-to-month lease agreements, whereas the CPA governs fixed-term lease agreements.

What are the two different types of Lease Agreements?

The two most prominent types of lease agreements are residential lease agreements and commercial lease agreements. A residential lease agreement will be for the rental of a domestic property, such as a house or an apartment, whereas a commercial lease agreement refers to properties such as office parks and factories.

Must a Lease Agreement be in writing?

Section 5(1) of the RHA states that a lease agreement between a tenant and a landlord doesn’t need to be in writing, albeit that a tenant is entitled to request that a lease agreement be reduced to writing in terms of section 5(2) of the RHA.

Accordingly, a verbal lease agreement will still be enforceable against any of the parties thereto.

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Why is a written Lease Agreement beneficial to the parties?

As with every agreement, reducing it to writing avoids any grey areas between the parties and consequently reduces conflict. By including specific provisions regulating the tenant and the landlord’s responsibilities relating to maintenance, default, and the payable rent, you can ensure sufficient clarity if and when a dispute arises.

In addition to the above, if a tenant defaults on the agreement, it is significantly easier to simply refer to the written lease agreement to substantiate the default because the lease agreement would refer to the amount of rent payable and the date and the manner pertaining to it.

Lastly, having a written lease agreement in place is an inexpensive and swift way to recoup arrear rental as opposed to leading evidence to confirm the terms of a verbal lease agreement.

My current tenant does not have a written Lease Agreement. What can I do?

A landlord cannot arbitrarily amend the terms and conditions on which the tenant started occupying the property unless both parties agree to the proposed change. In the case of verbal lease agreements, the landlord cannot simply increase the rent after a year unless the parties agreed on annual escalation when the verbal agreement was initially concluded. It is well within a landlord or tenant’s rights to request that the current verbal agreement be reduced to writing and signed by both parties.

How does a Lease Agreement expire or terminate?

In considering this, one has to distinguish between the expiration and termination of a lease agreement.

Termination

Where a lease agreement was concluded for a specific period, for instance, six months, the agreement would terminate or lapse on the last date of the six months, where the landlord has not renewed the agreement. If the tenant continues residing in the property and the landlord has not given the tenant written notice to vacate the property, the lease agreement would endure on a month-to-month basis.

Default

Typically, a lease agreement would have a specific clause to address any events of default. The general process applying in such an instance is that the landlord must send a notice to the tenant to remedy the default within a specific period, which will be stated in the lease agreement.

Where the lease agreement is silent on the period of remedy to be provided, section 14(2) of the CPA states that a period of 20 business days must be afforded to the tenant to remedy the breach. If the tenant fails to remedy the breach and the landlord elects to cancel the lease agreement, notice must be given to such effect.

Need to ensure your rights are protected in a lease agreement?

Although lease agreements are possibly one of most common and frequently signed agreements, they can be very complex. Having a written lease agreement drawn up between yourself and a tenant can reduce a lot of sleepless nights and save yourself expensive litigation costs. Contact Burger Huyser Attorneys to ensure that your lease agreement will protect you should any dispute arise.

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