This article was first published in the third-quarter 2016 edition of Personal Finance magazine.
This isn’t the first time it’s happened. Over the past five months, your tenant has paid the rent five, nine and 11 days after it was due. It has put a strain on your cash flow: the property is fully bonded, and there are levies and municipal accounts to pay. The good news is that your rental agency has a waiting-list of potential tenants who have passed its credit checks and are financially sound. The solution is clear: cancel the lease and instal a new tenant who will pay the rent on time.
You ring up the agent who procured your tenant and explain the situation to her. She says that finding a new tenant won’t be a problem, but she adds: “You do realise that, if your tenant is in material breach of the lease, you can’t cancel the lease without giving 20 business days’ notice? And you cannot cancel if the breach is rectified within those 20 days.”
“My lease does not provide for anything like that, and I know that the Rental Housing Act doesn’t, either,” you say.
“It’s in section 14 of the Consumer Protection Act (CPA), which takes precedence over a lease and any relevant legislation,” the agent says.
“You mean that, as long as my tenant pays the rent within 20 days after I send a notice threatening to cancel the lease, there’s nothing I can do?”
“Does your lease have a grace period?”
“No. The rent must be in my bank account before the end of the first day of each month.”
“If the rent is not paid by the end of day one, you can send a letter of demand giving the tenant seven business days to pay and stating that, if the rent is not paid by the end of day seven, you will issue summons for unpaid rent. Your letter could also state that, if the rent is not paid 13 business days after that, you will cancel the lease.”
“But,” you say, “that still means my tenant can pay late month after month without allowing me to cancel. Besides, there’s no point in serving a summons and paying an attorney to initiate legal action if the tenant is entitled to pay before the 20 days are up. This situation is causing me a lot of financial and emotional stress, and the lease still has another seven months to go.”
“Unfortunately, that’s how the CPA works.”
Well, does it?
A far-reaching law
The scenario outlined above highlights one challenge that the CPA poses for landlords. As this article shows, there could be many others.
When the Act came into effect in 2011, it replaced some of the common-law provisions that tradition-ally applied to residential leases. In looking after tenants’ interests, the CPA effectively trumps other legislation, such as the Rental Housing Act, which governs residential letting. Under section two of the CPA, if the provisions of any other law are inconsistent with the Act, the law that provides a tenant with the greater protection must take precedence.
Property law specialist Marlon Shevelew, the director of Cape Town property law firm Marlon Shevelew & Associates, says the CPA is “lopsided” in the tenant’s favour. The emphasis is on the landlord’s obligations to the tenant and the tenant’s rights, not the tenant’s obligations to the landlord.
Take section four of the Act, which states that if a lease contains an ambiguously worded clause that could be interpreted to favour either the landlord or the tenant, a court or the National Consumer Tribunal must interpret the clause to the benefit of the tenant.
Leases may not, in terms of section 51, include clauses that are designed to, or have the “effect of”, defeating the “purpose and policy” of the CPA. They cannot include clauses that “directly or indirectly” waive or deprive a tenant of a right under the Act, set aside or override the “effect” of any of its provisions, or void a landlord’s obligation under the Act. In other words, Shevelew says, you, as a landlord, cannot contract out of the CPA, even if you and your tenant would like to do so.
The penalty for contravening the CPA is a fine of up to R1 million or 10 percent of the landlord’s annual turnover, whichever is greater. Penalties aside, the Act’s prohibition on clauses that could be “excessively” one-sided in favour of the landlord, as well as the obligations it places on landlords, can provide tenants with grounds for a legal defence even though they are in material breach of the lease.
Trudie Broekmann, a Cape Town attorney who specialises in the CPA, says the Act has produced a “fantastic improvement” in consumers’ rights, but it is clear that the consequences of some of its sections for residential leases were not properly thought-through.
Shevelew says there are a number of opinions over how certain sections of the CPA should apply (or even whether they apply at all) to residential letting, but – and here is the key challenge when advising landlords – there is, as yet, no case law to settle these conflicting interpretations.
One of the country’s foremost experts in property law is Professor Henk Delport of Nelson Mandela Metropolitan University. In an article on “problematic aspects” of the CPA, published in 2014 in Obiter, the journal of the university’s law faculty, Delport wrote that the CPA itself states that it must be interpreted on the “broad policy, purpose and spirit of the Act”, not on the literal meaning of words.
Delport writes: “In general terms, the policy, purpose and spirit of the Act are to lay down certain standards and norms to promote the fair and responsible treatment of consumers in their business dealings in the marketplace. It is not the aim of the Act to destroy, hamper or distort sound business practices or to side with consumers at all costs. The promotion of fairness does not require that consumers be protected to the extreme, or that consumers be given the right in all instances to escape from the consequences of their business transactions simply because they changed their minds. The Act seeks to protect consumers against exploitation, unfair treatment and unscrupulous business practices, not to empower consumers to act deceitfully or to exploit suppliers.”
However, this still leaves landlords with the challenge of trying to anticipate where a court, or similar body, might draw the line between promoting fair business practices and protecting tenants against exploitation. Sometimes it is clear that a term in a lease will not pass the CPA test, sometimes it is not.
Section 14 and fixed-term leases
So, what can a landlord do when a tenant repeatedly breaches a condition of the lease, but remedies it each time within 20 business days?
The requirement to give 20 business days – which, effectively, translates into a calendar month – is in section 14 of the Act, which applies only to fixed-term agreements: agreements where the duration of the agreement has a commencement date and an expiry date. A lease that runs from month to month is, therefore, exempt from section 14. Second, section 14 does not apply where both the landlord and the tenant are juristic entities (which include companies, trusts and close corporations) irrespective of their annual turnover or asset value (see “When the CPA does and doesn’t apply”, below).
Shevelew says a literal interpretation of the Act means that a lease cannot be cancelled if a tenant rectifies a breach within 20 business days. The Act does not address what a landlord can or should do if the tenant breaches the lease repeatedly, but rectifies the breach within the notice period. However, he does not believe it was the legislature’s intention to give tenants 20 business days’ grace month after month to pay their rent and deprive landlords of their income.
Leases he has drafted for certain national tenant-management companies and estate agencies state that, if a tenant pays the rent late more than twice in any six-month period, it is clear that the tenant does not intend to be bound by the terms of the lease and the landlord has the right to cancel immediately without further notice. He admits that this or a similarly worded clause could fall foul of the CPA and its regulations, but, until the courts decide otherwise, it is better than leaving landlords exposed to persistent breaches of the lease without any remedy.
Elize le Roux, a director of SSLR, a Gauteng law firm that specialises in property, says SSLR has inserted a similar clause in the leases it drafted for tenant-management company TPN. She says that late payment, as opposed to non-payment, is not normally deemed to be a material breach, therefore its clause specifies that three instances of late payment within six months will constitute a material breach, and, if the tenant pays late again, the landlord will be able to cancel the lease.
Broekmann says an alternative interpretation of section 14 is that it does not impose the 20-day notice period as the only way for a landlord to cancel a lease. She points out that the drafters used the word “may”, not “must” in the relevant sub-section. Thus, a lease can provide for the landlord to cancel on reasonable grounds, which must be set out in the lease, without having to give the tenant 20 business days’ notice. However, if the lease does not include such a provision, the 20-day notice period automatically applies.
Section 14 deserves closer scrutiny, because it contains three other provisions with important implications for landlords:
1. A tenant can cancel a lease on 20 business days’ notice, but the landlord is entitled to charge a reasonable cancellation penalty;
2. A landlord who wants to renew the lease must send a tenant an offer to renew not more than 80 and not less than 40 business days before the lease will expire; and
3. A lease may not be longer than 24 months, unless both the landlord and the tenant expressly agree to a longer term and the landlord can show that it will benefit the tenant financially.
1. Tenant cancellation
A tenant does not have to give a reason for cancelling a lease on 20 business days’ notice. In terms of the Act, the cancellation notice can be sent in any “recorded manner or form”, which, Shevelew says, means that a tenant could cancel the lease simply by sending an SMS. Before the CPA, if a tenant wanted to end the lease before the expiry date, a landlord had two choices, he says:
* Accept the cancellation, but hold the tenant liable for every month’s rent until the landlord finds a replacement tenant who would pay the same rent; or
* Simply refuse to accept the cancellation and hold the tenant to the terms of the lease.
The CPA has removed these common-law rights, according to Shevelew. Although the CPA entitles landlords to impose a penalty as compensation for rent lost as a result of the cancellation, he warns that the CPA’s regulations make it clear that landlords, or rental agents, “cannot pull a penalty out of the air”. Indeed, regulation 5(3) states that a penalty may not be so large as to deter the tenant from cancelling the lease.
Regulation 5(2) states that the factors that can be taken into account when calculating the penalty include the rent owing for the remainder of the lease, the rent paid until the date of cancellation, the term of the lease, and the potential for the landlord “acting diligently” to find another tenant. The implication, Shevelew says, is that the penalty can be determined only when the lease is cancelled, and the size of the penalty will depend on whether or not the cancellation does, in fact, result in the landlord incurring a loss. In some cases, there might be no justification for charging a penalty – for example, your tenant gives you two months’ notice of cancellation and, after looking on Gumtree, you sign up a new tenant in less than a week of being given notice.
Broekmann says the wording of the Act and the regulations strongly imply that a penalty must be kept to a minimum, even if, for example, the tenant cancels a two-year lease in, say, month two.
A landlord cannot charge a cancellation penalty if the dwelling was leased as a result of direct marketing (not advertising the property, but cold-calling prospective tenants) and the tenant chooses to cancel in writing within five business days of the lease being signed or taking occupation of the premises, whichever is later. In this case, the landlord must refund any payments received from the tenant within 15 business days of receiving the cancellation notice or, if the tenant has already moved in, the tenant vacating the property.
If the property was not marketed directly, the landlord is entitled to hold a tenant who wants to cancel to 20 business days’ notice, and a reasonable cancellation penalty, even if the tenant wants to cancel one or two days after signing the lease or moving in.
Shevelew says it can be argued that a tenant who cancels without giving 20 days’ notice is not only in breach of the CPA, but also of the common law. This means the landlord is permitted to:
* Accept the cancellation, but hold the tenant liable for every month’s rent until the landlord finds a new tenant who will pay the same rent; or
* Refuse to accept the cancellation and hold the tenant to the terms of the lease.
2. Lease expiry
Section 14 also comes into play when a lease is due to expire. Not more than 80 business days and not less than 40 business days before the expiry date, the landlord must notify the tenant that the lease is due to expire and inform him or her of any material changes to the lease if it is renewed, or continues after the expiry date. The notice must also inform the tenant that, once the lease expires, it will automatically continue on a month-to-month basis, unless the tenant “expressly” informs the landlord that he or she wants to terminate the lease on the expiry date, or agrees to renew the lease for a further fixed term.
The attorneys Personal Finance spoke to say the 80-to-40-day notice is required in the following circumstances:
* If the landlord does not want to extend the lease. The notice serves to remove the misunderstanding that the lease will continue on a month-to-month basis after the expiry date. The tenant knows that he or she will have to vacate the property no later than the date on which the lease expires.
* If the landlord wants to renew the lease for another fixed period.
* If the landlord wants to make any material changes to the lease when it is either renewed for another fixed period or allowed to continue on a month-to-month basis.
Le Roux says if the landlord does not notify the tenant that the lease will not be extended and does not notify the tenant of any material changes to it, and the tenant remains in occupation, the lease will continue on a month-to-month basis subject to the original terms and conditions. However, Le Roux says, section 14 will not apply to the lease, because there is no fixed term.
Landlords who want material changes to the lease to take effect from the start of the new fixed term, or who want to allow the tenant to stay on from month to month, should ensure that the notification is not sent earlier than 80 days or later than 40 days, Shevelew says. Failing to adhere to the notice period could provide a tenant with grounds for not being bound by any material changes to the lease.
Although the section is clear about the notice that a landlord must provide, it does not set a deadline for the tenant to respond to the renewal offer. This can pose a problem for landlords, because they need to know in advance what the tenant’s intentions are. Therefore, the lease should include a clause that obliges the tenant to respond within a certain period of the offer being made, and states what will happen if the tenant does not respond.
3. Length of lease
A fixed-term lease cannot be longer than 24 months, unless the landlord and the tenant expressly agree to a longer term and the landlord can, in the words of regulation 5(1), “show a demonstrable financial benefit” to the tenant. Unfortunately, nowhere in the Act or the regulations is the term “demonstrable financial benefit” defined, Shevelew says. However, a possible example is if you offer your tenant a three-year lease with a rental increase of 10 percent at the start of year two and a lower increase at the start of year three.
Broekmann adds that the benefit for the tenant of not having to incur the cost of relocation after two years would also qualify as a “demonstrable financial benefit”. She says the nature of the benefit to the tenant should be recorded in the lease, to avoid disputes about the validity of the longer-term lease later on.
Not-so-fixed term
As pointed out earlier, section 14 applies to fixed-term leases. These leases are attractive, because they provide both the landlord and the tenant with security of tenure. However, the right of tenants to cancel on 20 business days’ notice, for any reason, has undermined landlords’ security in this regard.
Michelle Dickens, the managing director of TPN, a credit bureau specialising in letting, says section 14’s “onerous restrictions” have resulted in many natural-person landlords opting for month-to-month leases, and TPN has responded to this trend by providing such leases as an alternative to “full CPA” leases.
She says the advantages of TPN’s month-to-month leases include a shorter notice period to remedy non-payment – seven days, instead of 20 business days – and the ability of tenants to cancel a month’s notice without penalty.
Broekmann says she recommends that landlords who are juristic persons rent out their properties only to other juristic persons in order to avoid the restrictions of section 14.
Key pitfalls to avoid
Landlords can side-step section 14, but, if their lease falls within the ambit of the CPA (see “When the CPA does and doesn’t apply” below), they still have to take other sections of the Act into account. In particular, sections 48, 49 and 51 impose restrictions on a landlord’s freedom of action in the following ways:
* Section 48. Landlords may not, on terms that are “unfair, unreasonable or unjust”, require tenants to waive any of their rights, assume any obligation, or waive the liability of a landlord. A lease, or a clause in a lease, is unfair, unreasonable or unjust if it is “excessively” one-sided in the landlord’s favour, is “so adverse to the consumer as to be inequitable”, or if the tenant relied on “a false, misleading or deceptive representation” when entering into the lease.
This section needs to be read in conjunction with regulation 44, which contains a list of terms that are automatically presumed to be unfair, unreasonable or unjust. Tenants cannot be lawfully bound by these terms. Unfortunately, Shevelew says that regulation 44 can make it harder, not easier, to determine whether or not a clause is CPA-compliant. This is because the regulation states that a term on the list may not be unfair, unreasonable or unjust in some circumstances and that the list is not exhaustive: a lease could include a term that is unfair, unreasonable or unjust even though it is not on the list.
* Section 49. Landlords must “conspicuously” draw a tenant’s attention to any clause that limits the landlord’s risk or liability, transfers any risk to the tenant, obliges the tenant to indemnify the landlord, or requires the tenant to acknowledge any fact.
* Section 51. Landlords cannot limit or exempt their liability, directly or indirectly, for gross negligence (this is further explained below).
Although the CPA has been in operation for over five years, Shevelew says he still comes across leases with terms that may have been perfectly legitimate in terms of the common law, but have been rendered null and void by the sections mentioned above. He gives the following general guidance on common pitfalls that landlords should avoid:
* A landlord cannot indemnify him- or herself from claims by a tenant that arise from action taken by the landlord’s rental agent, unless the landlord can prove that the agent acted in a way that was contrary to the instructions he or she was given. This highlights how important it is that landlords:
– Provide agents with mandates that clearly define their obligations to the tenant and the landlord; and
– Contract with agents who have a good working knowledge of what the CPA requires.
* The property described in the marketing material and the lease must be the property, and any facilities, that are leased to the tenant. You cannot, for example, lead a tenant to believe that a property has business rights when it does not, or that he or she can park in the visitors’ bays when the body corporate’s rules state otherwise.
* A lease cannot contain a clause that states that, by signing the lease, the tenant has “deemed to agree or acknowledge” that certain things about the property are true. The landlord cannot require the tenant to acknowledge certain things about a property, unless the tenant has been able to ascertain whether those things are true, or those things have been drawn to the tenant’s attention. For example, a lease cannot state that, by signing the lease, the tenant has deemed to agree that the plumbing is in working order or that the dwelling is free of damp.
* A tenant cannot be prevented from counter-claiming from the landlord and setting off his or her claim against the rent. Say, for example, your tenant owes you R10 000 in rent. The tenant doesn’t dispute the debt, but says you owe him R5 000 because he paid for a new geyser to be installed after you failed to respond to repeated requests to replace the faulty one. The tenant is entitled to pay you only R5 000 in rent. However, Shevelew says there is much debate over the implications of this prohibition (see “No-deduction clause: is it still lawful?”, below).
* A landlord cannot hold a tenant liable for third-party expenses associated with the property, unless the lease makes the tenant liable for these expenses. In other words, if the lease does not specify that the tenant is responsible for paying for utilities, such as electricity, water, a security system or satellite TV, the landlord is liable.
* A landlord cannot hold a tenant liable for “excessive” penalties for breaching the lease. For example, if a landlord loses a few percentage points in interest, because the rent was paid a few days late into his or her bank account, the landlord cannot impose a penalty equal to, say, 10 percent of the tenant’s deposit. “A landlord cannot score off a tenant’s breach,” Shevelew says.
* A landlord cannot hold a tenant to using a particular forum in the event of a dispute. For example, a lease cannot state that a dispute may be decided only by a magistrate’s court or by arbitration. A tenant is entitled to use any of the legal avenues available to him or her, including the courts, the Rental Housing Tribunal and the National Consumer Tribunal.
* A landlord cannot indemnify him- or herself from losses incurred by the tenant as a result of gross negligence attributable directly or indirectly to the landlord. Shevelew says the distinction between “negligence” and “gross negligence” depends on the circumstances and would have to be decided by a court. However, this provision means that landlords should check that the property is free of defects that could result in the tenant suffering from injury or in his or her property being damaged – for example, unsafe electrical wiring or unsecured balustrades.
* A landlord cannot claim legal costs on the attorney-client scale, which are higher than the court tariffs, unless the tenant is also entitled to claim legal costs on the same basis.
Undue effort
The CPA, in section 22, requires lease agreements to be in plain and understandable language: it must be “reasonable to conclude” that an ordinary person, with average literacy skills and minimal experience in renting a property, will understand the content and significance of the provisions of the lease “without undue effort”.
Shevelew says the people who drafted the CPA should have heeded their own admonition, because it does require “undue effort” to work out how some of its provisions should be applied to relationships between tenants and landlords.
WHEN THE CPA DOES AND DOESN’T APPLY
The Consumer Protection Act (CPA) applies to a residential lease if the property is let in the ordinary course of business. Property attorney Marlon Shevelew says if a property-owner is regularly receiving an income from renting a property and declaring the income to the South African Revenue Service (as he or she should be), the lease is governed by the CPA. The number of properties that the landlord is renting out does not determine whether or not the CPA applies: it can be a single bachelor’s flat or dozens of three-bedroomed houses.
However, the CPA does not apply to a residential lease if the tenant is a juristic entity (such as a trust, company or close corporation) with an asset value or an annual turnover of more than R2 million. It also does not apply if the tenant is an organ of the state.
A tenant who believes that his or her rights in terms of the CPA have been infringed, can lodge a complaint with the National Consumer Commission, a Rental Housing Tribunal or a provincial consumer affairs court, or go to a magistrate’s court or the High Court.
NO-DEDUCTION CLAUSE: IS IT STILL LAWFUL?
It is common for leases to include a clause stating that the rent must be paid in full by the due date without deduction or set-off. In other words, the tenant may not withhold rent because he or she believes the landlord has failed to carry out his or her obligations under the lease. But are such “no-deduction or set-off” clauses still lawful in light of the Consumer Protection Act (CPA)? In the absence of a definitive ruling by a court or consumer tribunal, this remains a vexed question.
Marlon Shevelew, the director of Cape Town law firm Marlon Shevelew & Associates, says that, in his view, the CPA does not necessarily nullify these clauses.
He says relevant sections of the CPA are:
* Section 48, which outlaws contract terms that are “unfair, unreasonable and unjust”. Regulation 44(3)(b) under the Act states that a contract term will be presumed to be unfair if it excludes or restricts a consumer’s legal rights or remedies when a supplier breaches any of its obligations in terms of the agreement, including the consumer’s right to set off a debt owed to the supplier against any claim that the consumer may have against the supplier.
* Sections 54 and 55, which govern a consumer’s rights to quality service and to safe, good-quality goods. These provisions effectively mean that a landlord must provide the property to the tenant in the state that was agreed upon, and must maintain the property to that standard throughout the duration of the lease.
In light of this, Shevelew says it seems that a provision in a lease that purports to restrict the tenant’s right to deduct an amount from the rental would be deemed to be unfair.
However, he says it is important that the phrase “any claim which the consumer may have against the supplier” is read in the context of “when it excludes or restricts the legal rights or remedies”, because this clarifies that the tenant may deduct from the rent only where he or she has a legal right to do so.
Shevelew says the reference to “a debt” is important, because it is in line with the common-law principle that you cannot set off an illiquid debt (one not defined in monetary terms).
Where a tenant does not have full use and enjoyment of the premises, but wants to continue with the lease at a lower rental, he or she cannot unilaterally deduct an amount that he or she feels is appropriate.
In order for the set-off amount to be liquidated, the tenant and the landlord will have to agree on the amount, or the tenant will have to approach a Rental Housing Tribunal or a court to declare the amount reasonable. Only once this is done, will the amount be liquid, which can be set off against the rental due, Shevelew says.
He says the position is different where the tenant incurs reasonable, necessary and verifiable expenses to remedy a defect or to place the property in the state in which should be.
For example, the geyser bursts and the carpets are flooded. The landlord replaces the geyser, but, despite repeated written requests from the tenant, does not replace the damaged carpets. Finally, the tenant replaces the carpets and deducts the cost from the rent. The tenant is entitled to do this, because the claim is liquid – the tenant can produce receipts to show the actual amounts paid.
The bottom line is that a clause in a lease that seeks to limit or restrict the tenant from setting off a liquid amount against the rental, will be considered unfair in terms of section 48.
Trudie Broekmann, an attorney who specialises in consumer law, says she agrees with Shevelew’s interpretation. However, she points out that it is difficult for a landlord to judge whether a “no-deduction or set-off” clause can be inserted into a lease, and it requires sophisticated drafting skills to ensure that such a clause protects the landlord without being in breach of the CPA.
A clause in breach of the CPA is void, and it may have the effect of rendering the entire lease void, Broekmann says. So the smart thing is to take advice before you consider yourself protected – or if you are a tenant, restricted – by such a clause.
ADVERTISING A PROPERTY
It’s understandable that landlords and rental agents portray a property to let in the best possible light. But they should take care not to overly embellish their descriptions, because these could contravene the Consumer Protection Act’s provisions on deceptive or misleading marketing practices. In terms of section 41, a landlord or agent must not, “by words or conduct”:
* Directly or indirectly express or imply a false, misleading or deceptive representation concerning a material fact to a consumer;
* Use exaggeration, innuendo or ambiguity as to a material fact, or fail to disclose a material fact if that failure amounts to a deception; or
* Fail to correct an apparent misapprehension on the part of a consumer, amounting to a false, misleading or deceptive representation.
Marlon Shevelew says marketing or advertising material would contravene this section if it falsely states or implies, or deceives a prospective tenant into believing, that a property:
* Has characteristics, accessories, uses or qualities, or is of a particular standard or quality;
* Has or is near any facilities, amenities or natural features; or
* Needs maintenance or repairs, but that these are readily available and will be carried out.
THE RIGHT TO CANCEL A LEASE
A centuries’ old common-law principle can pose a problem to landlords who need to move into a property they have let out, or if the property is sold to someone who does not want to take over the existing lease. This principle is known as “huur gaat voor koop”.
It means that the sale of a property is subordinate to a lease agreement. If a property is sold, the new owner must honour the existing lease until it ends. It is not even necessary to insert an addendum in the lease to record that the property has changed hands; the tenant has to be told only to whom the rent must now be paid.
“Huur gaat voor koop” protects tenants from suddenly losing the roof over their heads if a landlord sells. But it can create significant problem for a landlord who sells long before the lease is due to expire. For example, you, as a landlord, run into financial difficulties and want to downscale by selling your large family home and move into the smaller property you are renting out. Or the only person who is prepared to meet your asking price for a tenanted property is not a buy-to-let investor, but someone who wants to move in on transfer.
Property lawyer Marlon Shevelew says he has inserted the following clause in the leases he has drawn up: “The landlord may cancel this lease on two months’ written notice on the following conditions: the landlord intends to move into the premises, or the landlord intends to sell the premises.”
But doesn’t this fall foul of the Consumer Protection Act (CPA)? The Act allows a landlord to cancel a lease on 20 business days’ written notice only if a tenant has not remedied a material breach of the lease before the notice period expires. Shevelew says that, according to regulation 44, a term in an agreement is unfair, unreasonable and unjust if it allows a supplier (landlord) to terminate the agreement at will where the same right is not granted to the consumer (tenant).
“I believe this indicates that the right to cancel should be reciprocal. If section 14 of the CPA allows a tenant to bring a lease to an end on 20 business days’ notice, why can’t a landlord do likewise on double or even triple the notice period, which will give the tenant sufficient time to relocate?”
But what about “huur gaat voor koop”? Shevelew says there is an exception to this principle: when a property is sold in execution. If a tenanted property is sold in execution and no one wants to buy it with the lease, the sheriff of the court is entitled to sell the property without the lease and the tenant will have to move out. “My argument is that the principle of ‘huur gaat voor koop’ is not absolute.”
Shevelew says he believes that the clause entitling a landlord to cancel the lease because he or she wants to move into or sell the property would pass muster in terms of the CPA if it is brought to the attention of a prospective tenant and its implications are explained to him or her.
Shevelew says he cannot guarantee that the arguments he has put forward in defence of the clause will hold up in a court of law. However, landlords should consider inserting such a clause, because it may protect their interests if they need the tenant to vacate the property.