How Consumer Protection Act Affects Lease of Property — Part 2

Cpa and Lease Agreements
How the CPA effects new Lease Agreements. – Photo: jimtim0505 on Flickr

South Africa’s new Consumer Protection Act comes into effect on 1 April 2011. Part 1 covered the introduction of a “Cooling-off” period and the use of “Voetstoots” clause under the new CPA legislation.

Part 2 deals with some important changes to the law governing Lease Agreements, when the new CPA comes into effect on 1st April.

Now some of my more astute readers will have noticed that this is also April Fools Day. Please people, this is purely co-incidental, however inopportune the date may seem.

Lease Agreements: The CPA introduces some far-reaching changes to Lease Agreements for immovable property. Specifically for ordinary people, the changes affect the maximum duration and grants the parties certain rights of cancellation.

Note that Leases to “Juristic Persons” fall outside the ambit of the CPA. “Juristic Persons” includes Closed Corporations, Companies, Trusts, Partnerships and Associations. No distinction is made between Commercial and Residential property.

Duration of Lease: The maximum duration of a Lease Agreement is 24 months.

Right of Cancellation: The Lessee (consumer) may terminate the Lease at any time after giving 20 (business) days notice, effectively one month. The Lessor must give 20 (business) days notice to cancel for a ‘material failure to comply with the agreement’ and must give 40-80 days notice that the agreement is coming to end.

After expiry, the lease continues on a month to month basis unless the Lessee agrees to a further fixed term.

From the above it can be concluded that the new Consumer Protection Act will bring some much-needed protection for consumers to the market place. Most think that it is also likely to result in Leases being contracted more readily with “Juristic Persons” and not the ordinary consumer. So a spike in Letting to “Juristic Persons” seems likely.

Similarly with the Selling of Property, Transfer Duty from the sale of property to “Juristic Persons” has recently been adjusted downwards to be on par with the Transfer Duty payable by an ordinary consumer. So the trend may be toward a greater number of sales to “Juristic Persons,” than would otherwise have been the case.

The Rental Housing Tribunal already administers a similar (to the CPA) scheme under the Rental Housing Act. It remains to be seen if this body will, in terms of Section 5(3) of the CPA, apply for an ‘industry-wide exemption’ to provisions of the CPA that overlap the Tribunal’s functions.

If there is anything you would like to add, please feel free to do so in the comments.

Source: Bisset Boehmke McBlain
Photo Credit: jimtim0505 on Flickr

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1,928 thoughts on “How Consumer Protection Act Affects Lease of Property — Part 2”

  1. Hi,

    I have a tenant who we have given notice to twice, via an attorney. They have not replied to the attorney. The last letter stated very clearly that they should vacate on or before 13th of February.

    The agent whom the attorney called to see if he had the keys, informed them that they have no intention of moving out. As you well know, an eviction order is very expensive.

    What to do now? Is there a less expensive option?

    1. Hi Marika,

      There’s no other (legal) way of getting rid of a tenant that won’t move, unfortunately.

      You may get advice from people about more unconventional (illegal) ways to do this. Don’t even think about it.

      You can recover legal costs from this individual, however.

      Best of luck.

  2. Hi John,

    I have paid a full deposit to an agent for a house on the 30/01/2015 and 2 weeks later I notify the agent that I am not moving anymore and now they do not want to give me my deposit back. Are they allowed to do it and I did not sign any contract just paid the deposit.

    Thanks

    1. Hi Quintin,

      When you paid the deposit you indicated your firm intention to proceed. More than likely, the agent immediately stopped looking for a tenant and any potential lessee that came along after that was told: “Sorry, it’s been taken”. Your deposit was used for the February rental, even though you didn’t actually move in.

      Look at it this way: How would you have felt if you’d kept your word, moved and on arrival found that the agent had let the property to someone else, leaving you homeless?

      School fees. Never part with money until you’re absolutely sure that you want the property.

  3. Hi John,

    We signed a fixed term contract with owner who has not mentioned anything in the contract about the termination of the contract by Lessee. We didn’t notice this initially and signed the agreement. But, within 24 hours we realized it and we didn’t pay anything to the owner yet.

    Though, we had mentioned it to owner during initial days of negotiation that there could be some situations where we may have to vacate the apartment and immigrate to other place; he didn’t specify it in the contract.

    We are really not sure about further ways, as we are already suspecting owner’s nature and do not wish to continue with the agreement. But, owner is compelling us to continue with the agreement and finish 12 Month’s term or pay all tenant replacement charges which could be several months’ rent + deposit + electricity + water.

    1. Hi Mak,

      Without seeing your contract it’s rather difficult to comment with any certainty. Best have someone, preferably an attorney, peruse your lease agreement and advise you as to the options that may be available to you.

      On the face of it, you can’t rely on anything verbally discussed with the landlord. This should have been reduced to writing and included in the contract.

      If your landlord is a “supplier” under the CPA you may cancel early. However, the landlord may be entitled to levy a cancellation penalty that could reasonably include a couple of months rental and the costs you’ve mentioned.

      Alternatively, perhaps you could help the landlord find a replacement tenant. If your substitute is acceptable to the landlord you could conceivably end up with a win win solution to your problem.

      Best of luck.

  4. Hi there,

    Not sure if this is right place to ask – but here goes.

    We entered into a lease with a new landlord and in the lease he states that the deposit will not be put into a interest bearing account. I have asked for help at the Tribunal – they plainly ignore me – read my mails but don’t reply :-( Is it not law now to place money in interest bearing account?

    Thank you

    1. Hi Annett,

      Deposits are indeed governed by the Rental Housing Act. In terms of Chapter 3 of the Act, under Clause 5.(3)(d), the landlord is obliged to invest your deposit in an interest-bearing account.

      The Rental Housing Tribunal (RHT) deals with issues such as the changing of locks by the landlord, wrongful evictions, forced entry or obstruction of entry and problems with deposits.

      Sending an email is not going to help much. You need to make a complaint on one of various prescribed complaint forms which are available on the Rental Housing Tribunal’s website. The one you need is most likely Annexure F (p): Complaint (pdf)

      A case file will be opened, a reference number allocated and the Tribunal will then make a preliminary investigation to establish whether the complaint relates to a dispute over which they have authority.

      Within 30 days of receiving the complaint you should be notified in writing that your complaint is receiving attention. The Tribunal will first try to resolve the matter with informal or formal mediation and, if the parties are unable to reach an agreement, the case then will be referred for a ruling at a formal hearing.

      Best of luck.

      1. Hi, thank you so much for this. He told me he won cases on same issue before with his lawyers – think he wants to scare me off – well im not scared that easily I will take this further.

  5. Hi,

    I rented a flat in Potchefstroom for my two student daughters, through a well known national estate agency, and paid two months rent as a damages deposit, directly to the agency trust account. We had to insist on the inspection being done, and got it documented almost a week after occupation. I however took photos of all defects I could see on the day we got the keys.

    At the end of the lease, 31 Dec 2014, neither the owner nor the agent contacted us to affect an out inspection. The property was however in a cleaner condition than when we took occupation. The owner did his own inspection on 6 Jan 2015, and i was advised by the agent that they would deduct roughly 50% of the deposit for cleaning and repainting the unit. I told the agent I did not agree with this, and provided them with my photos taken on the first and last day of the lease. The owner replied with a reduced cost of roughly 30% of the total deposit.

    I told the agent I found this unacceptable. I asked him to refund me according to their summary, and provide proof of cost of repairs, whereafter I would decide if I would take it further. The next day the agent told me he had paid the deposit to the owner and that I would have to take him to the tribunal to get it back. To date I have not received any refund, and I have logged a complaint with the tribunal.

    My question is if I have any recourse against the agent. I feel they acted unprofessionally and may have prejudiced my chances of getting a lump sum refund, as opposed to a monthly repayment if the owner pleads poverty.

    1. Hi Albert,

      Thank you for your question and for your detailed account. There is no question that you are entitled to a full refund of your deposit. The Rental Housing Act is very clear on this. Section 5(3) states deposits must be reimbursed:

      “Within 7 days of the expiry of the lease, if there are no damages or deductions, or if the landlord failed to inspect the property together with the tenant;

      Within 14 days of the finalization of repairs, if there are repairs to be carried out;

      Within 21 days of expiry of the lease if the tenant failed to inspect the premises together with the landlord.”

      Since there was no exit inspection, you were entitled to receive a full refund — within a week of the date of expiry of the lease. You would probably do better following up with the Rental Housing Tribunal, than going after the agent.

  6. Hi John,

    I leased a flat without physically seeing it. I saw it on the net and it looked pretty decent and in a good area so I did not see the need to view as I was in JHB and the flat was in DBN and I was relocating. However when I got there to take occupation, I found the flat in a pathetic state and it was not livable.

    I specifically chose this unit as it had air conditioning. However, when I got there I was told that the air-con does not work. All the window mechanisms were broken so there was no ventilation. The carpets in the bedrooms were old and dirty. The walls were dirty and needed to be painted. I did not take occupation of the flat but the agent is refusing to refund my deposit, one month advance rent and electricity deposit until they find a replacement tenant.

    This could take months as the owner refuses to do anything about repairing the flat.

    1. Hi Jerome,

      Section 16 of the Consumer Protection Act deals with direct marketing. In terms of the cooling-off right afforded consumers, you may have been entitled to cancel within 5 days of signing the lease.

      It may be worth your while to have your documentation perused by an attorney and get the benefit of an informed legal opinion as to what your options might be in this situation.

      There is perhaps one other option to consider. A recalcitrant landlord may be compelled to at least undertake essential repairs such as the broken window fastenings and hinges. You could have the repairs done on the lessor’s behalf and then deduct the cost from your rental, in installments if necessary. Please see this link for more on this in answer to Etienne’s question.

      Decide if you want to (a) cancel through an attorney or (b) do essential repairs at the landlord’s expense and move in as quickly as possible? Either option may have significant pro’s and con’s for you and either one is likely to cost you some.

      Best of luck.

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