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

You might also like . .

1,957 thoughts on “How Consumer Protection Act Affects Lease of Property — Part 2”

  1. Hi John,

    I have a month to month lease agreement with a renting agency for the last three years. I was then given a months notice as the owner has sold the property, but then the new owner contacted me and asked if I will be interested in renting the said property direct form him.

    He also said his lawyer informed him had he has no mandate with rental company from whom I was leasing from, thus we could draw up a lease agreement between ourselves. This we did, but now the rental agency refuses to pay back my deposit and is calling the lease still binding as long as I still lease the same property.

    Can they do this?

    1. Hi Armand,

      Once you’ve been given a months notice then the lease is expired or terminated. There’s no way the lease can still be binding after that.

      The rental agency is trying to protect their commission arrangement in terms of the mandate, if they have one, with the owner.

      Notwithstanding the above, there is no way an agent can arbitrarily withhold your deposit. The Rental Housing Act is very clear on this. In terms of Section 5(3) of the Act your deposit 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.”

      It is the previous landlord’s responsibility to refund your deposit and if the agent refuses to do so then the agent may be in contravention of the Act. Perhaps you could ask the owner to have his attorney write to the agent and demand that your deposit be refunded forthwith. You also have the option of approaching the Rental Housing Tribunal if you get no joy.

      Best of luck.

  2. I’m renting a house, we don’t have a contract only verbal, but the place I worked closed down and I am behind with the rent 2 months. I got new job but will only get payed the end of April. Can the owner evict me and how long notice must they give me?

    Thank you.
    woolley

    1. Hi Woolley,

      If it’s a month-to-month agreement the owner can give you a month’s notice, no reason required. If it’s a fixed period lease the owner must first give you written notice that you’re in breach and a reasonable opportunity to rectify. Then the lease may be cancelled if you don’t comply. Only then can the owner apply for an eviction order.

      The best thing to do would be to come clean with the landlord, agree on a payment plan for the arrears and then stick to the plan.

      Good luck.

        1. Hi Kashiefa,

          The landlord should not be taking the law into own hands and must first ask a court to grant an order.

          Issues like this can also be addressed by taking the complaint to the Rental Housing Tribunal. Disputes are resolved through mediation or by means of a formal hearing if necessary.

  3. Hi John

    A quick query, I am in my last month with my current landlord, whereby I gave him 2 months notice I was leaving. Unfortunately there were two attempts to break in, where they were successful the second time round in the middle of this month. In the process they broke two main windows, one of which was my bedroom window. I feared for my life so I made arrangements and moved what has left of my belongings the same day.

    I returned to the property 4 days later, the windows were still not fixed and I handed my keys over to the landlord.

    So my question is, do I have a leg to stand on with regards to requesting pro rata rent for the remaining two weeks of the month due to the house being uninhabitable and on the grounds that the condition of ‘no longer deemed fit for which it was let’ applies. Or was I wrong leaving the dwelling in haste?

    Although what would have happened to my remaining items of furniture and if the intruders returned the third night to finish off.

    It’s a conundrum.

    Thanks
    Brina

    1. Hi Brina,

      My sympathies for your unpleasant experience. In this type of situation it’s usually better to be safe than sorry and certainly, you had little choice other than to vacate for safety reasons.

      In the circumstances, you may be entitled to a remission in rent as you could not remain on the premises with broken windows, facing the possibility of a confrontation with burglars during a third break-in.

      You could start by writing to the landlord requesting a remission in rental on the grounds that the property was uninhabitable for the last two weeks of your lease. Hopefully, that will be the end of the matter and you will get your refund.

      However, if you get no satisfactory response within a reasonable period, say seven days, the Rental Housing Tribunal (RHT) is there to resolve disputes between landlords and their tenants, free of charge. You can register a complaint on one of various prescribed complaint forms available on the RHT’s website. The one you need is most likely Annexure F (o): Claim for Remission of Rental (pdf)

      Within 30 days you should be notified in writing that your complaint is receiving attention. A case file will be opened and a reference number allocated. Then the RHT will make a preliminary investigation to establish if it’s a dispute over which they have authority. Next, an attempt will be made to resolve the matter, first with informal, then with a formal mediation. Should the parties fail to reach an agreement, a formal hearing will be scheduled. All parties will be required to attend.

      Good luck, and please feel free to give some feedback.

  4. Hi is there a contract offer to lease and if there is and something that I don’t agree can it be canceled ?

  5. Hi John,

    We’re currently renting a house, our lease contract expired end of Dec 2014. Last night, 17/03, we went to go view a rental house elsewhere in our area and want to rent it as it’s much bigger, however the owner said he would only give it to us if we put in our monthly notice today, 18/03.

    What I wish to know is, even though we’re now living on a month to month lease (No paperwork), do I still have to give 1 calendar months notice or can it just be 30 days, starting from any date? The house we’re renting in currently is the only house the owner is renting out, he’s not running a rental business.

    Thank you in advance.

    1. Hi Rowan,

      When a fixed period lease comes to an end, unless there’s an intention to renew for a further fixed period, the lease reverts to a month-to-month basis on the same terms and conditions as the previous lease. Either party has the right to terminate with a months notice.

      Unless specifically provided for in the terms of your agreement, a months’ notice means a calendar month and it must be given by no later than the first day of the month for vacation at the end of that month.

  6. Hi,

    My tenant signed a three year lease through an Estate Agent. The Estate Agent and the tenant had an inspection snag list meeting and they did not invite me to this meeting nor did they include me in the correspondence of these snags.

    THREE months later the tenant sent it to me and now is claiming that I be held responsible for repairs I never agreed to as the tenant signed the lease saying that they would be responsible for all repairs and maintenance, other than structural repairs covered by my insurance company for which I have taken out insurance and I pay for.

    They have not paid rent for the last 3 months, nor paid for any services, water etc. etc. What to do? I am desperate.

  7. Hi,

    I have a lease agreement of 12 months with a tenant for a flat which only ends in October 2015. On the 24th February she sent her boyfriend (which is not on the contract) to inform me that they would be moving out on the 1st of March. I did not agree to this. They only gave me the keys on the 4th. She has not given me 20days notice and never contacted me in this regard. Do I have to give their deposit back?

    1. Hi Avs,

      A “supplier” as defined by the CPA is someone who lets out property in the normal course of business. The tenant of such a landlord is entitled to the protection of the CPA and may give 20 business days (effectively one month) notice at any time. However, the Act provides that the landlord is entitled to levy a cancellation penalty, usually equal to a month’s rent (read deposit) or even more if it’s reasonable.

      On the other side of the coin, you are not a “supplier” if you only let the occasional property and this endeavor does not form part of a business activity. In that event your tenant is not a “consumer” and may not cancel early. Here the tenant is bound by the terms of the lease and may be held liable for the balance of the lease period, or for at least until a new tenant can be found.

      In either case you would be entitled to withhold the deposit to defray loss of rental income. If there’s any damage to the property you might consider taking legal action to recover expenses.

      Best of luck and thanks for the question.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>