Lease Agreement Legality: Ensuring Compliance and Protection

Due to the prolonged delay in promulgating the Rental Housing Amendment Act of 2014, there is some confusion about whether or not a lease agreement in South Africa has to be in writing – but it is highly advisable for both landlords and tenants to ensure that they do have a written contract, says Andrew Schaefer, MD of leading property management company Trafalgar.  

“Under the statute that is currently still in force, which is the Rental Housing Act of 1999, landlords only have to provide a written lease agreement when the tenant requests one, but in the absence of such a document there is a high risk of misunderstandings and disputes arising over the terms of the lease that can only be resolved by taking legal action.

“So it is obviously better to have a written lease, signed by both parties, which clearly states and formalises the terms and conditions of the specific rental agreement between the landlord and the tenant, and the lease agreements used by reputable management companies like Trafalgar actually already comply with the provisions of the new Act, even though this has still not come into force.”

The proposed new legislation, he says, not only provides for all residential leases to be in writing, but also states that:

• The tenant’s deposit must be held in an interest-bearing account and repaid with interest at the end of the rental period (provided of course that there is no damage to the property);

• The landlord must supply the tenant with a property that is habitable, and must keep that property in a good state of repair;

• The landlord may not cut off the supply of electricity or water to the rental property and may also not lock a tenant out, even if the tenant is in arrears with the rent;

• The landlord may not evict the tenant without a court order.

“Some landlords and rental agents may still be using older lease agreements, which should at the least include the names of the parties, the address of the property being let, the rental amount and payment terms, the duration of the lease, the deposit amount and terms, the responsibilities of the landlord and tenant as regards maintenance and usage of the property, and the renewal or termination terms.

“It is also worth noting that all lease agreements need to comply with the Consumer Protection Act of 2008 (CPA) and that although both landlord and the tenant are bound by the terms contained in a lease agreement, there are certain responsibilities and obligations that will automatically apply even if they are not specifically included in the agreement.”

For tenants, these obligations include paying the agreed rent to the landlord by the agreed date each month, paying for the municipal services they use, taking good care of the property and returning it in the same condition as which it was leased, not subletting the property or using it for any purpose other than that for which it was leased, and vacating the property at the end of the lease.    

Landlords, in turn, are obliged to provide a habitable property and everything the tenant needs to be able to enjoy full use of it (such as keys, security codes or remotes), to ensure the privacy of the tenant, to maintain the property and keep it in good condition during the period of the lease, to attend promptly to any necessary repairs, and to pay the municipal property taxes.

Schaefer says deposits are one of the most common causes of disputes between landlords and tenants, so it is particularly important for lease agreements to contain a section that clearly states the damage deposit amount payable by the tenant, what it is for, whether it will need to be topped up when/ if the monthly rental is increased, where it will be held and in what circumstances it will be or won’t be returned.

“It is also essential for both parties to understand the different ways in which a lease agreement can be cancelled or terminated. In most cases, a lease will end on the expiry date stated in the lease agreement, but it can also be cancelled amicably by either the landlord or the tenant giving the other party written notice of at least one month. This could occur if the tenant needed to relocate for work before the end of the specified lease period, for example. However, penalties may apply for early cancellation, and these should be clearly stated in the lease agreement.

“The CPA also provides for tenants to back out of a lease agreement at any stage with a notice period of 20 business days but once again, penalties may apply.

“And thirdly, the lease agreement can be terminated as a result of either the landlord or tenant being in breach of the agreement and failing to remedy that breach within a certain period of time. When a tenant fails to pay the rent, for example, this is a breach of the lease agreement and the landlord can demand, in writing, that this must be remedied within a certain time. If the tenant still fails to pay, the landlord is then entitled to cancel the lease agreement and start eviction proceedings.”

He says that once a lease agreement has been signed, both parties must keep a copy, as well as a copy of the ingoing inspection report. If the rental property is in a sectional title complex, the landlord or managing agent should also attach a copy of the Conduct Rules for that complex to the tenant’s copy of the lease.

“However, given the increasing complexity of the legislation relating to rentals, both landlords and tenants should hold off on signing a lease agreement unless they are sure they understand all clauses and their implications, and should seek qualified, independent legal advice if they are in any doubt.”

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