WHICH LAWS GOVERN LEASE AGREEMENTS?
As either a landlord or a tenant it is important to know which laws
govern lease agreements. The following laws are applicable:
- Rental Housing Act 50 of 1999 (“the Act”);
- Law of Contract;
- Common Law; and
- The Constitution of the Republic of South Africa.
The purpose of the Act is not only to regulate the relationship between the landlord and tenant but also to facilitate a dispute resolution mechanism in the form of Rental Housing Tribunals.
One might question whether the Consumer Protection Act 68 of 2008 (“CPA”) is also applicable to lease agreements.
According to the CPA, landlords, rental agents and buy-to-let investors can be seen as suppliers and tenants can be seen as consumers. It is however paramount to distinguish in what scenario landlords will be considered suppliers. A landlord will only be considered a supplier if he leases property in the ordinary course of his business. The protection offered to consumers by the CPA does not apply to all consumers, for example the provisions of the CPA will not apply to any transaction in terms of which the consumer is a juristic person whose asset value or annual turnover, at the time of the transaction, equals or exceeds R2 million .
MUST A LEASE AGREEMENT BE IN WRITING?
In accordance with Section 5 of the Act, a lease agreement need not be in writing. However, a landlord must reduce a lease agreement to writing if so requested by the tenant. A written lease agreement is beneficial as it clearly stipulates the landlord’s and tenant’s rights and responsibilities.
In accordance with Section 6 of the Act, a written lease agreement must include the following information:
- The names of the tenant and the landlord and their addresses in the Republic for purposes of formal communication;
- The description of the dwelling which is the subject of the lease;
- The amount of rental of the dwelling and reasonable escalation, if any, to be paid in terms of the lease;
- If rentals are not paid on a monthly basis, then the frequency of rental payments;
- The amount of the deposit, if any;
- The lease period, or, if there is no lease period determined, the notice period requested for termination of the lease;
- Obligations of the tenant and the landlord, which must not detract from the provisions of Section 5(3) of the Act or the regulations relating to unfair practice;
- The amount of the rental, and any other charges payable in addi-tion to the rental in respect of the property.
Section 7 stipulates that a list of any defects must be attached as an annexure to the lease agreement and Section 8 further stipulates that any house rules that are applicable to the leased premises must also be attached as an annexure.
In this issue::
- Which laws govern Lease Agreements?
- Must a Lease Agreement be in writing?
- Provisions deemed to be applicable to Lease Agreements
PROVISIONS DEEMED TO BE APPLICABLE TO LEASE AGREEMENTS
Section 5(3) of the Act stipulates certain provisions that will be deemed to be included and applicable to a lease agreement and which are enforceable in a competent court, whether or not these provisions are stipulated in a lease agreement. These provisions may not be waives or contracted out of by either the landlord or the tenant. The aforementioned provisions include inter alia the following:
- The landlord must provide the tenant with a written receipt for all payments received. The receipt must be dated, specify the period for which payment was made, include the address of the leased premises and stipulate whether the payment was made for rental, arrears or deposit;
- The landlord may require the tenant to pay a deposit, which deposit must be invested in an interest-bearing account;
- The tenant and landlord must jointly inspect the dwelling before the tenant moves in, in order to ascertain the existence or not of any defects or damage;
- At the expiration of the lease, the landlord and tenant must arrange a joint inspection to establish if there was any damage caused to the dwelling during the tenant’s occupation;
- On the expiration of the lease, the landlord may apply the deposit and interest towards the payment of any amounts for which the tenant is liable including the costs of repair of any damage to the dwelling. The balance of the deposit must be refunded no later than 14 days of restoration;
- The receipts relating to the costs of repairs must be made available to the tenant for inspection;
- If no amounts are due by the tenant, the deposit must be refunded, without deduction, within 7 days of termination of the lease;
- Failure by the landlord to inspect the dwelling will be deemed to be an acknowledgement by the landlord that the dwelling is in a good and proper state of repair;
- Should the tenant fail to respond to the landlord’s request for inspection, the landlord must within 7 days from expiration of the lease, inspect the dwelling to assess any damage;
- Should the tenant vacate the dwelling before the expiration of the lease, without notice to the landlord, the lease is deemed to have expired on the date the landlord become aware that the tenant had vacated. The landlord will retain all his rights arising from the tenant’s breach of the lease. In these circumstances the landlord may deduct from the deposit any reasonable costs of repairing damage to the dwelling and the costs for replacing lost keys. The balance of the deposit must be refunded to the tenant no later than 21 days after expiration of the lease; and
- Any costs relating to the lease agreement will only be payable by the tenant upon proof pf expenditure by the landlord