Rental Tribunals and its ‘problematic’ clauses
The following are examples of “problematic” clauses: -
Deposit: Parties agree to waive the right to interest on rental or damage deposit. Another clause states that the deposit shall be refunded to the tenant not later than 60 days after termination of the lease.
Such clauses would be void and unenforceable. The Act does not compel a landlord to charge a deposit. However, should a landlord elect to collect a deposit, then certain rules apply and these are mandatory requirements that parties cannot waive.
The tenant is not under statutory obligation to pay a deposit. However, the landlord is legally allowed to ask for a rental deposit, the amount to be agreed between the parties. The deposit must be held in an interest-bearing account. The bank’s interest rate in which the deposit is held must not be less than the rate of its savings account. The deposit must be refunded within seven days after the tenant has vacated the property, or within 14 days if the landlord has to deduct the costs of repairs or any other costs the tenant was liable for.
Eviction: A tenant agreeing to an unlawful clause that gives the landlord the right to summarily evict him or her is prohibited by law and is void, as the court held in Blomson v Boshoff 1905 TS 429.
When a landlord cancels the lease agreement for the sole purpose of increasing the rent, the tribunal can decide if the cancellation is justified.
Unlawful action: The tenant is not bound by a clause that gives the landlord the right to resort to unlawful action. “Tenant accepts that if he is in rental arrears and fails to remedy the breach, the landlord is permitted, without further notice or demand, to remove all external doors and security gates and disconnect services.”
Administrative charges: “When the tenant fails to pay on the due date, she would be liable for a surcharge to cover collection fees and/or additional administration costs. The tenant shall on demand pay such surcharge to the landlord.”
Some agents and landlords charge an interest rate of 2% a month for late payment or arrears, the maximum allowed by the National Credit Act. This may appear to be a reasonable rate, but a lease of an immovable property is not subject to the NCA. In Absa Technology v Michael’s Bid a House 2013 (3) SA 426 (SCA), the court confirmed that in terms of Section 8 (2) of the credit act, leases of immovable property were excluded.
The landlord is not allowed to take punitive action by charging administrative or collection fees for late payment. The law allows the landlord interest for late payment and parties may agree what interest rate would be charged. In the absence of an agreement about the interest rate, the landlord cannot charge more than the maximum of 10% per annum.
A penalty clause in terms of the Conventional Penalties Act 15 of 1962 allows the innocent party to claim from the defaulting party a sum of money, or to deliver or perform in terms of the contract. A lease may contain penalties for breach, such as late payment and arrears rentals.
The tenant is bound to pay interest if this is part of the written agreement.
Section (3)(a) of the Gauteng rental housing unfair practices regulations forbids penalties for late payment: “A lease agreement must exclude any provision which imposes a penalty for late payment of rent, whether or not the penalty takes the form of administrative charge or any other form other than interest.” It therefore recognises interest as the only form of penalty.
Date of occupation: “The tenant waives all rights to claim damages or to cancel the lease agreement should the landlord be unable to give the tenant occupation of the property on the date of commencement of the lease.
“If the tenant fails to take occupation of the property for whatever reason, the landlord may immediately cancel the lease agreement without notice. The tenant shall forfeit the deposit and will remain liable for any loss of rental income or any other loss incurred by the landlord.”
“These clauses would not be allowed because parties cannot waive their rights or be subjected to lease provisions that are detrimental or favour one party.”
Jurisdiction: “The tenant hereby consents to the jurisdiction of the Magistrate’s Court in regard to any matter arising out of this lease agreement.” The tribunal will not be divested of its powers by such a clause, since any unfair practice arising out of the lease agreement is subject to its jurisdiction.
After the tribunal declares clauses to be void, punitive or repressive, the landlord cannot enforce these. Such clauses would constitute unfairness or unreasonableness,.
Should the landlord disregard the tribunal’s order and continue to enforce such provisions, he or she may be criminally liable in terms of Section 16 of the Act.
Dr Sayed Iqbal Mohamed is the chairperson of the Organisation of Civic Rights and deputy chairperson of the KZN Rental Housing Tribunal. He writes in his personal capacity. For advice, contact Pretty Gumede or Loshni Naidoo at 031 304 6451 / [email protected] or [email protected]