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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1,910 thoughts on “How Consumer Protection Act Affects Lease of Property — Part 2”

  1. Hi John

    i found a letter “notice to vacate” in my post box

    the letter was written on 21 Jan 2015, and on the letter it states “hand delivered”

    there are no reasons on the letter to justify why i must vacate the premises nor does the owner of the premises know about the letter

    i am seeing the property managing agent tomorrow regarding the notice but i was hoping you could inform me more as to what their rights and mine are in this situation please?

    1. Hi Clinton,

      Vacate when? Only a “material breach” of your Lease Agreement can result in the lessor or agent delivering such a letter to you. In other words, it must be something significant enough to give the aggrieved party the right to sue for breach of the terms of your contract.

      Failure to pay the rent on time is a typical example of a material breach. However, generally the aggrieved must first have given the other party a written notice of breach and reasonable opportunity to rectify the problem.

      If the letter just fell out of the sky and you have no knowledge of any problem, then the correct procedure has not been followed and you have nothing to worry about, yet.

      It would be great to know what the outcome is. Best of luck.

      1. Hi John

        After speaking to the owner and Kemprent the managing agent, my wife and i decided to vacate in anycase as the complaints are about my kids being to noisy in the playground area as well as in the unit.

        i really do think that if people do not want kids laughing and playing in townhouse complex’s they should not allow couples or family’s with kids to move in.

        It would be more of a tedious process to contest the notice than rather moving out of the complex into a house.

        Thank you very much for the reply, much appreciated.

        1. Hi Clinton,

          You could probably win this and yes, the process may be protracted and painful. I can certainly identify with your motive for moving to greener pastures. Sounds good to me.

          Thanks for the feedback.

  2. I signed a lease for my business for 3 years which comes to an end 31 May 2015. The location was not working for me so I gave 30 days notice to terminate the contract after two and a half years. I have since moved out. The landlord says I cannot terminate the contract even though this is not stated in the contract. Is this correct? He says he will take 2 months rent including utilities from my 3 months deposit. Is this a fair penalty? Is there any argument I can use to negotiate the penalty down?

    1. Hi Carol,

      Lessors who let commercial space are generally considered to be “suppliers,” under the CPA.

      The Lessee in this case is a “consumer” and enjoys the protection of the Act. A Consumer may terminate a Lease at any time after giving 20 (business) days notice, effectively one month.

      In terms of the Act, the landlord is entitled to levy a cancellation penalty. This might be a months’ rent, or more if it’s reasonable.

      You could try to persuade the owner to allow you to help with finding a new tenant. If the result is that the landlord is not out of pocket, you may get your deposit or part of it back, if you ask nicely.

      Good luck.

  3. We have verbally accepted to lease a property from 1 Feb. We had to pay the deposit and lease costs, etc, upfront with rental agency.

    However, we are still awaiting the lease agreement from the agency in order to sign. We are vacating our current house on 31 Jan, as a replacement tenant is moving into our current premises.

    Can we cancel on taking the above property, should we find another, and will our deposit and fees paid to agency be refundable, as we have not taken occupancy, nor has lease been received for review and signing?

    There are no cancellation / deposit or forfeiture clauses in the agency application forms, etc, which we have signed. These forms were simply personal detail applications and TPN application forms.

    1. Hi Russell,

      Rule number one: never pay the deposit, or any other fees, until you are sure that you want the property.

      The problem you may be confronted with, should you cancel now, is that you are basically at the mercy of the agent; should the agent deduct “costs” or withhold your deposit in its entirety, you will be forced to take legal action to recover your money. The legal costs could easily be more than the amount you claim, depending on circumstances.

  4. When I signed the residential lease as the landlord, I told the estate agent that this could be illegal as it was for 3 years and not two years. To date she has still not come back to me on this. Furthermore, she has also not supplied me with a credit check. I was told it was a corporate lease, which it is not. It is in the name of a foreigner and I do not know if he he the necessary work permits in SA. I have only received the rent for Dec on the 22nd of Dec. please advise what to do?

    1. Hi Marika,

      First you need to know if you are a “supplier” as defined by the Act. In other words, a landlord who rents out property in the normal course of business. If not, the CPA does not apply to your contract and the duration of the lease can be any period agreed between the parties.

      Under the CPA, there are exceptions to the rule that a lease period may not exceed two years. If a longer lease period would result in a tangible benefit, for example a reduced rental, then the lease may be longer.

      It’s important to note that, in terms of the Immigration Act 13 of 2011 which came into effect on 26 May 2014, it is a criminal offense to rent out property to an illegal resident. Establish if your tenant has the necessary permits to reside in South Africa.

      Clearly, it’s unacceptable that your rent is collected on the 22nd of the month. You need to sit down with your agent and have a chat. Confirm that you want your rent collected on time. Ask for proof of your tenant’s status and request a copy of the credit check that was done.

      Follow up by confirming all the details of your meeting in writing, so that you have a record for future reference. Insist that your agent fulfills your mandate to collect the rent on time. You can fire your agent if you are unhappy with the agent’s service.

      Good luck.

      1. Hi

        Thanks for your reply. I did the lease through an agent, but they do not manage the property.

        With regards to the immigration act, what papers should I ask for?

        I await your response

        Marika

        1. Hi John,

          The Estate Agent did not invite me to the inspection to do a snag list, and this was only forwarded to me 4 months later by the tenant. This is a mess.

          Please help

          MARIKA

  5. Hi John-the past few years I’ve been renting my property out through the same estate agents. The agents neglected to do a property inspection with the previous tenants that moved in, but insured me when the tenants before them moved out that the house is still in the exact same condition as when they moved in.
    Now the previous tenants moved out and when the new tenants moved in they sent me a list of lots of things that is not up to standard in the house. I’ve requested the list from the agents who sent me a list from more than a year ago-none of these problems shows up on that list.
    So there are quite a few things that need to be fixed. The previous tenants are threatening legal action if their full deposit is not paid back to them by the end of today (This coming Friday is 2 weeks since they moved out)
    According to them the house was in that condition when they moved in.
    The agents wants to refund their deposit as they don’t want to put up this fight.
    What am I to do?

  6. I signed a years lease and was told a 3 months notice period was required. the lease is to expire in Jan 2015. I placed notice on 23 Sept and advised that I need to move out on 1 Dec due to work and schooling commitments for which I had to arrange and settle down for.
    He stated that the rental still had to be paid despite me moving as he will be out of pocket. Not being able to afford paying rental for 2 properties, I suggested that I assist his rental agent to find a suitable tenant who will comply with the necessary credit checks etc. I found the tenant and before the process can be finalised, the landlord then informs me that he will no longer be getting a tenant and will occupy the property himself but can only do so when the lease expires end of Jan and until then I am expected to pay the rent. This is a shared property with the landlord occupying the cottage fulltime with his wife, daughter and grandchild (no body works there) and myself and my husband (full time employed) occupying the main house. The lease agreement stated that a prepaid electricity meter will be installed and in the interim the bill will be shred 50/50. The meter is yet to be installed and he has now split the bill 3:1 with me paying the higher bill. What recourse do I have?

    1. Hi Daisy,

      Even though your landlord agreed to accept a replacement tenant, it’s not in your written lease agreement. If the landlord does a u-turn there’s no much you can do about it.

      However, the meter is a different matter. The landlord is obliged to split the bill as specified in the lease agreement. You could adjust your next rental payment to make up the difference, and explain this to your landlord by email when you do so.

  7. hi.

    Me and the family have been renting a house for nearly 2 years now. We are supposed to renew our lease agreement now to start on 1 December. which I did in October, I signed a rental agreement renewing for up to 4 months (next year March). I renewed for a shorter period now because we have been looking for a house. We have now found a house and our bond application was approved 2 days back. The seller of the house told our agent that we can even move into the house before the bond registration is done because the house is vacant (he now stays in another province), as long as the transfer attorney consents. now we feel that 4 months is a long time for us to wait.

    the owner of our house might not get a tenant before our new agreement expires and we will be liable to make payments for the remainder of the months. Now, I would like to ask if it is possible to withdraw on the contract or change the rental agreement period even though we have signed but the contract will only start in December?

    Thank you for the help
    kind regards

    1. Hi Sindile,

      You won’t be able to change your lease agreement unless the landlord agrees. If you withdraw from the sale agreement now, you may be held liable for the attorney’s pro-rata costs and fees to date as well as the agent’s fees. The seller may even sue for damages.

      Perhaps you could try to find another tenant to take over from you. If you find someone suitable and the landlord approves, it could be the end of your problems.

      Good luck.

  8. Hi.

    I have signed a 5 year lease in my business capacity for the house we live in and a workshop where we work from.

    The landlord also works from the property and he works every weekend, giving us no privacy. He has numerous workers living here and i feel my safety is at risk.

    He also has not fixed certain problems in the house.

    I have given notice and now he wants to enforce a 12 month penalty. Can he do this?

    1. Without seeing your lease agreement, it’s hard to say much. You should really have someone, preferably an attorney, peruse your contract for you. You can take it from there. You are certainly entitled to your privacy and you’re right to be concerned about the safety aspects of having strangers milling around in your private space.

      Commercial leases are intended to cater for the specific needs of commercial tenant and landlord and are relatively complex compared to the average residential lease. If yours is a commercial lease, the penalty you mentioned may be provided for and it may be enforceable. Maybe not. There’s no way to know without seeing your lease agreement.

  9. Hi there,

    We signed a rental lease in August 2014 and took occupation in September 2014. In October my Husband was brutally attacked by four robbers and sustained serious injuries. We have not been able to settle into the property as we no longer feel safe.

    We submitted in writing to our Landlord our intent to cancel our lease. He replied in writing that he did accept our cancellation but would insist on a few conditions as follows: in the event a suitable tenant was not found before the end of November we would be liable for December’s rental; and if by December he had not placed someone we would therefore be liable for January’s rental; we are to be liable for his admin and advertising costs; and lastly he would deduct R2500.00 from our deposit for early cancellation.

    However, I have read through our lease over and over and there is no clause, or even a mention of the above mentioned, in the lease. Yet his letter states he insists on conditions of our lease. We have paid the full rental amount for November, plus pre-paid electricity which he buys at R1000.00 a time plus the water bill, he is holding a deposit of R9000.00 which we would like him to refund on our vacating the premises.

    If he has not stipulated anything whatsoever in his lease agreement about early cancellation fees, can he still deduct these amounts from our deposit?

    On signing the lease with an “agent” present (whom is not responding to any of my communiques), there was no verbal mention of the aforesaid cancellation fees, either.

    Does the landlord have to specifically include in his lease any clauses and forfeits in regards to early cancellation of a lease or is it not necessary for him to do so? Can he just deduct away from my deposit?

    Thank you.

    1. Hi Helen,

      I’m so sorry about your husbands experience with robbers and I can certainly understand that you feel unsafe in the property.

      Unfortunately, no landlord can be expected to guarantee the safety of tenants. Rather lessees are responsible for their own security and must take all necessary measures to be safe.

      Your landlord can’t make any arbitrary deductions from your deposit, particularly if it’s not covered in your lease agreement. Deposits and deposit refunds are controlled by the Rental Housing Act 50 of 1999. Any deduction from your deposit, for repairs for example, must be properly accounted for by the landlord. You are entitled to ask for copy invoices.

      You have the option of referring any dispute with the landlord to the Rental Housing Tribunal. This statutory body’s function is to resolve disputes between landlords and their tenants, free of charge. This link will take you to a (pdf) document with contact details of their offices, country-wide.

      Good luck.

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