If, on the other hand, one of the parties wants to cancel because the other is in breach of the contract, then certain notice periods come into effect – the first of which being, of course, that the aggrieved party is required to “give written notice for the breach to be remedied. Failure to remedy the breach in the stipulated time period, will entitle the innocent party to cancel the lease and (where relevant) claim damages suffered from the offending party.”

A tenant has the RIGHT to cancel a lease agreement, be it in the 1st month, 4th month or second-to-last month of the lease agreement. He cannot be ‘punished’ for doing this and the cancellation does not constitute a breach of the lease agreement.

What must an agent do if a tenant decides to cancel?

1. Obtain the cancellation in writing from the tenant.
2. Ensure the cancellation gives the requisite 20 business days’ notice.
3. Charge rental until the end of the 20 business days (even if this is not a full month’s rental).
4. Log on to TPN and end the lease as at the end of the 20 business days.
5. Keep in mind the lease now ends as at the end of that 20 business days.
6. Should the tenant remains in the premises a new lease MUST be signed as once cancelled, a lease cannot be revived at law. If you fail to do this, you essentially have no long-term lease in place.
7. Begin advertising the property immediately- the onus is on the agent/landlord to find a replacement.
8. Keep all invoices from the advertising as this is one of the costs you may pass along to the tenant in terms of a ‘reasonable cancellation penalty’.

What can an agent charge the tenant that cancels early?

The idea behind this reasonable cancellation penalty is not to penalise the tenant, but to recover any actual loss suffered by the landlord as a result of the cancellation. The following cost could be applicable:

• Credit check costs for any prospective replacement tenants (even those who are not accepted);
• Advertising costs (only the actual amounts on the invoices);
• Rental – the exact number of days that the unit remains vacant after the tenant vacates.

It is important to keep in mind that all calculations of the penalty can only be made once a replacement tenant has been found. It must also be kept in mind that where a tenant cancels, for example, in month 10 or 11 of a 12-month lease, you cannot charge the tenant the full remainder of the lease as this would negate the cancellation. The principles behind cancellation penalties lie in our law of undue enrichment. A landlord/agent cannot make a financial gain or benefit off of a tenant’s cancellation.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

http://www.privateproperty.co.za/advice/property/articles/how-to-cancel-a-residential-lease/3315    http://www.melcoproperties.co.za/template/ArticleDisplay.vm/articleid/2243

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The Rental Housing Act No. 50/1999, as amended by the Rental Housing Amendment Act No. 43/2007, regulates the relationship between a tenant and a landlord, even before commencement of the lease agreement.

The Act determines that the landlord may not discriminate against the prospective tenant, his family or friends, including on grounds of race, sex, pregnancy or marital status. This applies as early as placing an ad for the leasing of a property or even during negotiations between prospective tenants and the landlord,

The lease itself does not have to be in writing to be binding on both parties and should a tenant request that an oral agreement be reduced to writing, the landlord may not refuse the request.

A written lease agreement must contain the following information:

• The names of the parties, as well as their South African addresses;
• A description of the property being leased;
• The monthly rental payable and reasonable increases;
• The deposit payable, if applicable;
• The period for which the property will be leased. Should the agreement not mention a specific period of lease, the agreement must indicate the notice period required should one of the parties wish to terminate the contract;
• Any other consideration, besides the monthly rent, which may be payable;
• A complete list of defects that are present at the time that the parties entered into the lease agreement.

If the property is situated in a complex that has its own rules, a copy of those rules should be attached to the lease agreement.

The landlord must ensure that he/she gives effect to the provisions contained in the lease agreement.

As mentioned, mutual rights and obligations are created for both parties in the lease agreement. These rights and obligations include the following:

Tenant’s rights:

• To jointly inspect the property before the tenant moves in and record any defects or damage to the property. This provision protects the tenant at the end of the lease period to ensure that the tenant will not be held liable for damages that already existed at the time the lease was entered into;
• During the lease period, the tenant has the right to privacy and the tenant’s property, home or person may not be searched;
• If the landlord fails to inspect the property upon expiry of the lease, the tenant can assume that the landlord acknowledges that no damage has been done to the property, and that the full deposit, together with interest thereon, must be refunded to the tenant.

Landlord’s rights:

• To request a deposit, in the amount agreed upon between the parties, before the tenant takes occupation of the property;
• To receive timeous payment of the monthly rent and also to collect overdue payments, after a court order or order from a Tribunal has been obtained;
• To receive the property in a good condition upon termination of the lease;
• To jointly inspect the property within three days before the lease expires and determine if any damage has been done to the property for which the tenant should be held liable;
• To recover the cost of repairs, should the property be damaged, from the tenant;
• Should the tenant not give access to the property for a joint inspection before expiry of the lease, the landlord should inspect the property within seven days after expiry of the lease and utilise the deposit for necessary repairs. The balance of the deposit, if any, should be refunded to the tenant within twenty-one days.

Landlord’s obligations:

• To invest the tenant’s deposit in an interest-bearing account at a financial institution, with an interest rate equal to or higher than the interest rate at that time earned on a savings account at such financial institution. The tenant may request proof that the deposit is invested and the landlord may not withhold such evidence;
• To furnish the tenant with a receipt for each payment made by the tenant, which receipt should clearly describe the property, be dated, and indicate in full what the payment is made for (eg Rent for the month of February 2013, or deposit);
• To utilise the deposit to repair any damage to the property or to recover arrears rent after expiry of the lease, and to pay the balance together with interest earned thereon to the tenant within fourteen days after the expiry of the lease;
• To keep all receipts in respect of repairs done to the property which were deducted from the tenant’s deposit, and make such receipts available to the tenant;
• To refund the tenant’s deposit together with interest thereon, within seven days of the expiry of the lease, in the event that no repairs are to be made to the property.

Should a dispute arise between the parties, the Rental Housing Tribunal in the area where the dispute arises, can be contacted.

It is very important for both the tenant and the landlord to make sure that their intentions are clearly defined in the lease and that they understand the terms of the lease before the lease agreement is signed. Also that all provisions, responsibilities and obligations are clearly set out in the agreement. It is advisable to seek legal advice if any uncertainties arise, before the lease agreement is signed.

References: Rental Housing Act No. 50/1999, as amended by Rental Housing Amendment Act No. 43/2007

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

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