RENTAL WATCH: Can tenants legally sublease?

By Sayed Iqbal Mohamed Time of article published Feb 27, 2019

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CONSUMER: Do tenants have the legal right to sublease or sublet? Can the landlord or property owner take action against his or her tenant for subletting?

According to the Rental Housing Act, a “landlord means the owner of a dwelling which is leased and includes his or her duly authorised agent or a person who is in lawful possession of a dwelling and has the right to lease or sub-lease it”.

We can divide this definition into two parts:

(a) The first part of the definition simply means what it says. The landlord is the owner who himself enters into a lease with a tenant; and a person (a duly authorised agent) who concludes a lease on behalf of the owner or performs any act on behalf of the landlord based on the lease.

(b) An explanation is necessary for the second part of the definition: “or a person who is in lawful possession of a dwelling and has the right to lease or sub-lease it”.

A lawful possessor such as a tenant, spouse, friend, co-owner or any person or entity given the right of possession and the right to lease or sublease.

Under common law, a tenant has the right to sublease. The “principal” tenant becomes the landlord and the subtenant becomes the tenant of the “principal” tenant. The tenant may be denied the common law right to sublease without permission by a clause in the lease that states that he or she may not sublease without the landlord’s written consent.

What are the rights and duties of the contracting parties to a sublease?

A person claiming superior title or the owner who denies having granted the right to sublet does not automatically acquire the right to stop the rights and duties of the contracting parties to a sublease. He or she must prove such a right if disputed or challenged by instituting legal action, and having obtained an order (judgment or ruling) from a court or the tribunal to that effect.

Until then, the tenant and subtenant, as landlord and tenant, have contractual rights and obligations that are enforceable through the tribunal or a court of law.

In certain circumstances, the court may join the owner in a dispute between a tenant and subtenant where its decision would have serious implications for the owner, or may not grant an order without joining the owner but provide other relief to the tenants or subtenants, as in the case of Mpange and Others v Sithole 2007 (6) SA 578 (W). In this case, Judge Kathleen Satchwell was unable to make a specific performance order for the following reasons:

1. The landlord was not the owner. An order of this nature had serious implications for the owner who may not be able to institute a claim against the landlord.

2. Delaying the proceedings so that the owner could be joined with the respondent-landlord would further prejudice the constitutional rights of the tenants.

3. The court was not in possession of the proposal detailing repairs and regeneration of the building to be undertaken, cost implications, time frame, disruption for tenants and alternate accommodation during the period of regeneration.

According to the judge, the desperate tenants of Leyland House in Johannesburg were at the mercy of an unscrupulous slum landlord. They faced the legal dilemma of being evicted and homeless, and on the other hand, as paying tenants, living under unsafe conditions. Since it was not possible to grant a specific performance order, the judge reduced the tenants’ rentals.

In Sealand Transport Services CC and Others v eThekwini Municipality 2012 ZAKZDHC 81, the subtenants failed in their bid to stop their evictions. The court held that the subtenants had to vacate the property since their landlord Zedek Trading 82 CC’s lease with the eThekwini Municipality was terminated and an ejectment order was granted.

Judge Vahed said that the result was that the subtenants found themselves in no better position than Zedek.

“When Zedek’s right of occupation terminated, so did that of the applicants; and when Zedek is compelled to vacate the property, they are similarly compelled. There is consequently no basis in law for the applicants to claim to be allowed a period of time to relocate”.

Ellerine Brothers (Pty) Limited concluded a lease in 2006 with Toits Motor Group (Pty) Ltd (the tenant), which in turn sublet a portion of the property to McCarthy Limited (subtenant).

Toits Motor was unable to meet the rental payments in 2009 and Ellerine placed the tenant on a notice of breach, requiring payment within seven days to avoid the cancellation of the lease.

During the seven days, a creditor made an application to the high court for the tenant’s liquidation. The liquidator subsequently stepped in and surrendered the sub-lease to the landlord, Ellerine Brothers.

The sub-tenant, McCarthy Limited, refused to pay rent, stating that the lease with Toits Motor, the main tenant, was cancelled and, as a result, the sub-lease was also cancelled. Ellerine Brothers took the matter to the North Gauteng High Court to claim the rentals from the sub-tenant and, having lost the case there, took it on appeal to the Supreme Court of Appeal.

In a judgment on March 19 last year the court - Ellerine Brothers (Pty) Limited v McCarthy Limited 2014 (4) SA 22 (SCA) - pointed out that the liquidator inherited the lease in its entirety. The liquidator or trustee of a liquidated tenant has the right to decide whether to continue with the lease or cancel it.

The court confirmed the legal principle that a subtenant’s rights to the leased property were subject to those of the tenant.

Dr Mohamed is chairperson of the Organisation of Civic Rights and deputy chairperson of the KZN Rental Housing Tribunal. He writes in his individual capacity. Email [email protected]

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