Dealing with a breach in lease

INLSA

Picture: Chris Collingridge

A breach is when a party performs late or fails to perform on its contractual obligation; the innocent or aggrieved party is allowed to cancel for a major breach.

A tenant can cancel outright the lease for a major breach and therefore end the lease.

A major breach would be the landlord/lady failing to make the dwelling available on the agreed date or refusing to do so.

Another example is the failure to carry out repairs that substantially affect the use and enjoyment of the dwelling.

A landlord can also cancel a lease contract completely for a major or material breach and demand the tenant move out immediately.

If a breach is minor, either party must give a notice to remedy or correct the breach. If this is not done within a specified time, then the lease can be cancelled by providing a notice of cancellation.

Notice

According to section 14 of the Consumer Protection Act, a landlord must give 20-working days’ notice to the tenant to rectify a breach. Such a landlord must be in the business of renting out properties.

If the tenant cancels, say for the landlord’s failure to maintain the dwelling that placed the onus on him to carry out repairs and maintenance, the lease is cancelled.

The landlord’s refusal to acknowledge or accept the cancellation (for breach) does not have an effect on the lease that is cancelled.

Similarly, if the landlord cancels the lease for late payment of rental, the tenant’s acceptance or rejection of the cancellation is not required for the termination to come into existence. The lease is cancelled and the relationship between the parties comes to an end.

Should the tenant fail to pay after a notice is given to remedy the breach, the landlord can cancel the lease agreement.

Clause

A clause stating that the landlord has the right to cancel should the tenant fail to pay his or her municipal charges for the water and electricity consumption on time, affords the landlord the right to cancel.

The Rental Housing Act requires that the grounds for cancellation for residential dwellings must be stipulated in the lease and may not constitute an unfair practice:

“The landlord’s rights against the tenant include his or her right to – terminate the lease in respect of rental housing property on grounds that do not constitute an unfair practice and are specified in the lease, (section 4(5)(c)).

A tenant may have at least three options when a cancellation is made for breach: the tenant can ignore the cancellation and continue to occupy the dwelling, at enormous risk if a breach has been indeed committed; accept that he or she has breached the lease contract and vacate the dwelling; or, accept the cancellation (as a repudiation of the contract) and institute an action for damages (Van Zyl v Rossouw 1976 (1) SA 773 (NC)).

If the tenant is in breach but refuses or fails to vacate, and the landlord follows ejectment proceedings, the tenant would be liable for legal costs and ultimately removed by the sheriff on a writ of execution issued by a court at the landlord’s instruction.

Should the tenant intend to challenge the landlord’s cancellation and can prove that the breach did not occur, the tenant must hold the landlord to the lease.

In other words, the tenant must continue to occupy the dwelling and discharge his or her obligations. The tenant should notify the landlord that there is no breach.

Take for example the case where the landlady alleges that the tenant failed to pay rental on the first day of the month, as agreed. The tenant indeed failed to honour the agreed payment date.

The landlady cancels the lease because cancellation for late payment is not an unfair practice and the lease contract contains a clause that states that the landlady can cancel for late payment.

The landlord or tenant does not have to cancel for breach and can decide to continue with the lease, or may choose to invoke the breach at a later stage, depending on the nature of the breach.

The courts would examine an alleged breach within the context of the lease and the construction of a clause breached would depend “upon a consideration of the nature, effect and scope of the lease and the intention of the parties as gathered from the lease” (Protea Assurance Co Ltd v Presauer Developments (Pty) Ltd 1985 (1) SA 737 (A)).

In the Protea Assurance case, the court held that the tenant did not breach the lease by erecting non-permanent partitioning. These did not amount to alterations and additions that required the landlord’s prior written consent.

Limit

The courts could limit the meaning of clause as in the Chang case (Chang NO v Coral Blue Trading No. 3 CC 2008 JDR 0594 (E)). Cancellation for breach was an extraordinary remedy and the tenant installing a geyser without the landlord’s permission did not breach the lease.

In Jacobs and Another v Upward Spiral 1196 CC (AR 539/09) (2012) ZAKZPHC 9 (27 February 2012) the tenant Jacobs demolished a bathroom that was used by another occupant, materially affecting the ordinary use and enjoyment of the dwelling. The court found that the landlord was entitled to cancel the agreement.

l Dr Sayed Iqbal Mohamed is the chairman, Organisation of Civic Rights.

For tenants’ rights advice, contact Loshni Naidoo or Pretty Gumede at 031 304 6451.