The importance of a proper Lease Agreement is that it is the foundation of the landlord-tenant relationship. A Lease Agreement is a legally binding contract between a landlord and tenant that outlines key terms of their rental arrangement.
The Rental Housing Act provides that Lease Agreements can be oral or in writing. However, written Lease Agreements prove to be better for enforceability.
The Lease Agreement covers important details and terms under which the property is rented such as the rent amount, possible increases, notice periods for cancellation, and who is responsible for property repairs. Having a proper Lease Agreement with a tenant assists in protecting your rights as a landlord.
It outlines the terms to ensure that both parties to the agreement understand their rights and obligations. The risks of a landlord being without a properly drafted Lease Agreement include the exposure to contractual disputes regarding the terms of the lease, financial loss and any complications relating to the rent payments.
Many landlords assume that a verbal Lease Agreement or a generic lease template is adequate. However, this misconception can lead to legal uncertainty of the Lease Agreement, making it difficult to enforce rental terms, recover damages, or evict non-compliant tenants.
A well-structured Lease Agreement is significant and protects a landlord’s interests while providing certainty and legal protection for both landlords and tenants.
A Lease Agreement should conform to the Rental Housing Act, the Consumer Protection Act 68 of 2008 (where applicable), and common law principles.
Verbal Lease Agreements are legally valid under South African law, as provided for in section 5(1) of the Rental Housing Act. Tenants have a right to request a written Lease Agreement.
Another common misconception is that security deposits in the Lease Agreement are non-refundable. Security deposits can be returned to the tenant at the end of the lease, if the tenant has followed the lease rules, and the property is left in good condition.
Landlords have the obligation to provide receipts for the deposit, kept in an interest-bearing account, in accordance with section 5(3) of the Rental Housing Act. Landlords can only take money from the deposit for damages, unpaid rent, or any bills the tenant owes.
A comprehensive Lease Agreement should include the following critical components:
Rental Amount and Payment Terms: The Lease Agreement should clearly address what monthly rent amount is due for the tenant’s use of the property, the date when the rent is due, what the acceptable payment methods are, and penalties for any late payment by the tenant. Rental Housing Act provides that Landlords are prohibited from increasing rent excessively.
Security Deposit: The Agreement should specify the deposit amount, the conditions for deductions pertaining to the deposit, and the timeline for returning the deposit upon lease termination.
When a dispute arises, the deposit should remain in the trust account until the Rental Housing Tribunal resolves the dispute.
The Rental Housing Act mandates that the security deposits be held in an interest-bearing account and refunded with interest, minus any lawful deductions such as damages for wear and tear.
Lease Duration and Renewal Terms: The Rental Housing Act doesn’t specify a set duration for Lease Agreements. It allows for landlords and tenants decide on the length of the lease themselves, whether it’s a fixed-term or monthly lease.
However, fixed-term leases won’t automatically renew unless both the landlord and tenant agree to it. Section 14 of the Consumer Protection Act applies to fixed-term residential leases and grants tenants the right to cancel early with 20 business days’ notice.
Maintenance Responsibilities: The Agreement must identify which repairs and maintenance tasks fall on the landlord, as opposed to the tenant. For instance, the tenants are usually responsible for minor repairs, while the landlords handle structural property repairs.
The Rental Housing Act specifically makes provision that landlords must maintain the premises in a habitable condition.
Landlords have the common-law duty to ensure “commodus usus” (comfortable use) of the premises.
Breach and Termination Clauses: The agreement should provide details of the consequences of non-payment, illegal activities, or failure to maintain the property.
This should include procedures for issuing notices and evictions under the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998, regulating the eviction procedures.
A cancellation clause should adhere to section 14 of the Consumer Protection Act for consumer leases.
The legal benefits of having a Lease Agreement include the following:
Clear Expectations for tenants and landlords: A well-written Lease Agreement helps both the landlord and tenant understand their responsibilities, making it less likely for problems to occur.
It creates a stable and predictable rental experience for both sides.
Provides legal recourse to disputes: The lease gives both parties a clear guide on how to settle the issues, based on what was agreed upon in writing. Should either party to the Lease Agreement breaches or acts in contravention of the agreement, both parties will be able to take legal action against the other.
The Rental Housing Tribunal provides an accessible dispute resolution mechanism under section 13 of the Rental Housing Act.
Although they are enforceable, reliance on verbal agreements or poorly written leases by landlords expose them to several risks, including:
Difficulties in proving the terms: When a dispute arises between the tenant and landlord regarding the verbal Lease Agreement, it can be a challenge for the landlord to prove what the terms of the agreement are.
A Written Agreement that clearly stipulates the terms of the Agreement can be helpful in these instances.
Challenges in enforcing the terms of the Agreement: Without a Written Agreement as proof, it can be difficult for a landlord to enforce rental payments, notice periods and maintenance duties that the tenant may have in terms of the agreement.
Legal challenges: In eviction or damage claims, landlords may struggle to prove their case, making it harder to recover financial losses from the tenant. The courts are more reluctant to order the eviction of tenants in disputes where lease terms are unclear or non-existent.
The courts consider a list of factors including if any vulnerable people are involved in the dispute, other available accommodation available to the tenant, and financial circumstances of a tenant.
Therefore, having a comprehensive, legally sound Lease Agreement is essential for landlords to protect their interests.
A one-size-fits-all Lease Agreement may not adequately cover the specific needs of various rental arrangements between the tenant and landlord.
Customisation Is Important, Particularly For:
Residential vs. Commercial Leases: Commercial Lease Agreements often involve longer terms and different maintenance obligations than residential leases.
There are also more limitations on any modifications that can be made to a property in the case of residential leases. Commercial leases usually provide more flexibility in this regard.
The Consumer Protection Act, which is not applicable to all commercial leases (only those where tenants are individuals or small businesses under the turnover threshold of R2 million) is particularly crucial to commercial agreements.
Furnished vs. Unfurnished Properties: If a rental includes furniture, the lease should specify inventory lists and conditions for potential damage.
Subletting: Any associated fees and restrictions on subletting should be clear to avoid unauthorised tenants from occupying the property. The lease should specify whether subletting is allowed.
By tailoring Lease Agreements to individual circumstances, landlords can prevent unnecessary complications and legal disputes.
The Rental Housing Act and the Rental Housing Amendment Act impose legal requirements on Lease Agreements. Key provisions include:
Mandatory Written Lease Agreements: While verbal leases are legally valid, landlords must provide written leases if requested by the tenant, in accordance with section 5(1) of the Act.
The Rental Housing Amendment Act, while not yet in effect, mandates that Lease Agreements be in writing. This should be considered by the landlord for future Lease Agreement.
Fair Rental Practices: Lease Agreements must not include unfair terms, such as excessive rent increases.
The Rental Housing Act and its Amendment prohibit unfairly discriminatory conduct in rental agreements, and this extends to the selection process for tenants.
The Act also prohibits arbitrary evictions by providing that the Prevention of Illegal Eviction from Unlawful Occupation of Land Act regulates the evictions to this effect.
Deposit Handling: The Act specifies that security deposits must be placed in an interest-bearing account and returned with accrued interest after deducting legitimate costs.
Maintenance Obligations: The Rental Housing Act provides that Landlords must ensure the property is habitable for the tenants and maintain essential services like plumbing and electrical systems.
Failure to comply with these legal requirements can result in Lease Agreements being declared invalid or unenforceable, leaving landlords vulnerable to legal challenges.
To create a Lease Agreement that is legally sound and tailored to specific rental needs, landlords should:
Consult with a legal profession: Attorneys can assist with the drafting of a Lease Agreements that complies with South African rental laws and includes clauses that protect the landlord’s interests.
Avoid the use of generic lease templates: Pre-made lease templates may lack critical provisions specific to parties, leaving landlords unprotected in disputes.
Regularly update the Lease Agreement: Case law developments, which have implications on Lease Agreements, should always be considered in updating the Lease Agreement between the tenant and landlord.
In conclusion, a properly drafted Lease Agreement is an essential tool for landlords, offering legal protection and minimising disputes.
Investing time and resources in creating a solid lease, ensures that both landlords and tenants understand their rights and responsibilities, leading to smoother rental relationships.
If you need assistance drafting or reviewing your Lease Agreements, contact Martin Vermaak Attorneys for expert legal guidance.
– Consumer Protection Act 68 of 2008.
– Rental Housing Act 50 of 1999.
– Rental Housing Amendment Act 35 of 2014.
– Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998.
– A Comprehensive Guide to Legally Evicting Unlawful Tenants in South Africa
– The Termination of a Lease
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