WRITTEN BY MARI VAN DER WALT
24 MAY 2022
James Dyson said: “Nobody wants the expenditure of a lease on a factory which lasts 21 years. You can’t plan 21 years ahead.”
A lease agreement is a mutual contractual agreement between a landlord and a tenant. A lease agreement is binding and enforceable; consequently, early termination of a lease agreement should be done very precisely to avoid any future legal action due to a breach of the lease agreement.
Can I rely on the early termination clause in the lease agreement?
Yes, if the lease agreement makes provision for early termination, you will be forced to rely on this clause, subject to the lawfulness of the clause. If the parties agree on the notice period in the lease agreement, either party may give notice, and the agreement will terminate as per the terms of the agreement. If the parties did not include the notice period in the agreement but made provision for early termination, the parties may rely on the common law principle, being one calendar month’s notice.
How can I cancel my lease agreement if there is no early termination clause in the lease agreement?
If the lease agreement does not make provision for the early cancellation of the lease agreement, the parties will have to rely on the Consumer Protection Act as well as the Rental Housing Act.
Can the tenant terminate a lease agreement early?
Yes, the Consumer Protection Act 68 of 2008 allows for early termination, subject to two conditions:
1. If it is a fixed-term lease agreement, meaning the agreement will be for a specific duration; for example, the lease will run for 12 months.
2. If the person entering into the lease agreement is a natural person.
Section 14(2) of the Consumer Protection Act 68 of 2008 provides that the tenant must give 20 business days’ written notice to the landlord of their intention to terminate the lease agreement.
It is important to note that the tenant will remain liable to the landlord for any amounts owed to the landlord in terms of that agreement up to the date of cancellation. The landlord is also within his rights to impose a reasonable cancellation penalty.
The penalty imposed by the landlord cannot have the effect of negating the tenant’s right to cancel a fixed-term agreement.
What reasonable penalty fee can the landlord charge for the early termination of a lease agreement?
The guidelines for determining the reasonable amount for early termination of a fixed-term consumer agreement are set out in Regulation 5(3) of the Consumer Protection Act 68 of 2008. These guidelines do not clearly define how the penalty fee for lease agreements is calculated but rather give a broad guideline on fixed-term consumer agreements in general.
As the Consumer Protection Act does not give clear guidelines on reasonable penalty clauses for lease agreements specifically, we are guided by general practice, which usually includes:
· The actual losses that the landlord has suffered due to their inability to find a new tenant;
· advertising costs to find a new tenant; and
· the rental agent’s pro-rata fee.
It is important to remember that the landlord must prove that they attempted to mitigate their damages and took positive steps to find a new tenant. In general, an amount equal to 2 months’ rental is awarded if the landlord is unable to find a new tenant.
How do I terminate a month-to-month lease agreement?
Section 5(5) of the Rental Housing Act 50 of 1999 provides that either party wishing to cancel the lease agreement can do so by giving written notice of its intention and allowing at least one month as the cancellation period.
Is breach of a lease agreement grounds for termination thereof?
Yes, a properly drafted lease agreement will have a clause explicitly dealing with the termination of the agreement if the tenant has breached the lease agreement. Usually, the party in breach will be given notice of the breach and a certain number of days to rectify the breach. Failing to rectify the breach will give the parties grounds to rely on the standard procedure for cancellation of the lease agreement.
Should you wish to terminate your lease agreement, contact one of Burger Huyser Attorneys’ lease agreement attorneys to ensure that you comply with all legal requirements in order to avoid being in breach of the agreement.
DISCLAIMER: Information provided in this article does not, and is not intended to constitute legal advice. READ MORE
