Change in letting agents cannot affect a lease
By Dr Sayed Iqbal Mohamed
A tenant is not expected to know if the letting agent is authorised to act for the landlord on whose behalf the lease is presented to the tenant, or signed by the agent on behalf of the landlord. The lease is binding on the landlord unless the agent was not instructed at all.
When a landlord appoints a letting agent, he or she, as the principal, authorises the letting agent to act on his or her behalf and perform certain duties in relation to the letting of the property. In return, the principal pays a commission for the specific work done.
The instruction or authority the agent accepts is referred to as a mandate. The authority may be a procurement mandate only, that is, to find an appropriate tenant. If it is a management mandate, also known as “continuance” or “full administration”, the agent is responsible for advertising the rental property, doing a credit and reference check of the prospective tenant, attending to the lease contract, managing rental payments, joint incoming and exit inspections, and maintenance of the property.
What would be the situation if the letting agent with a management mandate secured the tenant, used the agency's lease, collected rentals but later absconds?
Does this affect the lease contract between the landlord and the tenant? Is the absconder-agent’s lease still binding or would it be necessary for the landlord to have another lease signed by the tenant?
When there is a change of ownership, the lease contract remains unaffected. When ownership is transferred to the new owner-landlord, the lease agreement is uninterrupted. The new owner is bound by the lease and will continue with the rights and obligations of the previous owner as if there were no change in terms of the huur gaat voor koop rule (hire comes before a sale). The tenant is equally bound to the new landlord.
It follows that the change of letting agents cannot disturb the contractual relationships between the landlord and his or her tenant. The landlord may decide to deal directly with the tenant and terminate the contract with the agent. The mandate with the agent may end if the agent "disappears" (absconds). Whatever the relationship between the landlord and the agent and in whatever way it ends, the lease between the landlord and tenant continues uninterrupted.
Last week, the Organisation of Civic Rights (OCR) was unable to convince an agent in Johannesburg that there was absolutely no need for the tenant to sign a new lease with them. The landlord's previous agent de-registered itself and swindled the landlord of the tenant's rental deposit and one month's rental.
The tenant signed an addendum to the lease agreement allowing him another year but a month later, the agent “disappeared”. The landlord then secured the services of another agent who manages his other properties. The new agent contacted the tenant informing him that he needed to sign their lease agreement.
The tenant was not willing to sign a new lease and pay admin and inspection fees. He communicated his objection to the new agent and explained that he was in occupation for two years.
He received the following response: “With regards to your email query, please note that, yes, you may have been living in the unit for two years. However, you will be ‘new’ to us and therefore we need to load you on our system, open files, etc, therefore you are charged an admin fee.
“The inspection fee is charged to you as we will need to conclude an inspection for our file. Our fees are standard fees and are not negotiable.
“The lease agreement I sent you will supersede the lease renewal you signed with the previous agency. I cannot backdate a lease so if you are looking to have the lease expire on the May 31, 2021 as per the renewal you signed, let me know so that I can advise the owner of this.
“If you are not happy to proceed with the signing of the contract and or renting the unit please let me know as I will need to discuss the way forward with the owner.”
The tenant paid rentals and utility charges into the previous agent's account but with the agent no longer operating he was concerned about paying his future rentals. He was anxious that the non-payment due to no fault of his own may provide a reason to evict him. The new agent was not willing to provide the owner’s contact details and by chance he managed to get his telephone number from someone in the complex. It would appear that he was being forced into signing the new lease.
The tenant approached the OCR for assistance.
When the OCR contacted the owner and explained the legal implications to him, he was most understanding and arranged to meet his tenant to deal directly with him. Contrary to what the new agent informed the tenant, the owner had no intention of evicting him. In fact, the owner was relieved and was quite happy to meet his tenant for the first time.
The agent who “disappeared” represented the owner of the rental property; the agent's disappearance therefore did not affect the existing lease. The parties to a lease agreement, the landlord and the tenant, have contractual rights and corresponding obligations that are enforceable through the provincial Rental Housing Tribunal or a court of law. It would not matter if the lease signed by the parties was prepared by an agent and bears the agent’s details including the agency name.
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.