Legal City(TM) :: Your Online LEGAL Partner(TM)
2nd Floor, North Block, Bradenham Hall, 7 Mellis Road, Rivonia, 2128
P O Box 837, Gallo Manor, 2052 • E-Mail. info@legalcity.net Telephone. 086 11 78378 • Fax. 086 648 7683
This document has been provided courtesy of Legal City - www.legalcity.net
General Disclaimer: The content of Legal City does not constitute legal, tax or financial advice, nor does it necessarily reflect the views of our management, staff, shareholders, associates, contributors, authors or suppliers. Even though every endeavour has been made to ensure the accuracy of this information we cannot be held responsible for any errors and/or omissions. By using this web site you agree to accept and abide by our terms and conditions. The web site and all its content is copyright © 2000-2014, Legal City CC • This page printed on October 23, 2014 at 2:37:38 am, SA Standard Time.
Legal City :: Your Online LEGAL Partner

You and Your Rights

Terms and Conditions were
last updated on 3 Aug 2008
qPortal Content Management

You and Your Rights

Please note that since this book was last published in 1997 some of the laws that have been referenced may have changed. We are doing our best to update the articles, however, it is advisable that you to consult an attorney before relying on any information contained herein.

Renting

Things to remember about renting property

As soon as you become a tenant by moving into rented property, you enter into an oral or a written lease agreement with the owner of the property. In terms of the lease (which is, in fact, a contracts governing letting and hiring) the property owner (the lessor) makes a binding agreement to give you (the lessee) the temporary use and enjoyment of the property in return for the payment of rent, which in the majority of instances is monetary.

The only exception to this form of payment may occur when agricultural property is leased and the parties agree that the rent may be a specified quantity or a fixed proportion of produce - such as wheat or dairy products - from that property.

Rent, generally, should be a monetary amount and it should be for a fixed or determinable sum.

The parties can agree on a figure arrived at by a method or formula, or even on an amount calculated by a third person. If the formula proves unworkable or the designated person fails to fix the rent, the lease fails.

Before you move into your rented premises, you will probably have to pay the costs of drawing up the lease, as well as the stamp duty on it, one month's rent in advance, a deposit - in most cases equal to one month's rent - as security against any damage you might cause and a deposit towards the connection of water, electricity or gas.

What must be in a lease

A lease contains three essential items:

  • An agreement to let you (the tenant) have the temporary use and enjoyment of the property;
  • An undertaking by the property owner to give you possession;
  • A commitment from you to pay the rent. In a written lease it is important that the property is specified by its full street address, suburb and town (or farm name, number and magisterial district). An erf number (where it is known) may also be recorded, but make sure that it corresponds with the street address.

An agreement can be a contract of lease only if:

  • A definite period is stipulated;
  • The lease is to continue until the occurrence of a certain event, of which the precise date may be unknown (such as the death of the tenant or property owner);
  • The lease can be terminated by either the property owner or the tenant;
  • The lease is for an indefinite period, with rent payable periodically - in which case it becomes a 'periodic' lease.

Short and long leases

There are two basic types of lease agreement - a short lease, for less than 10 years; and a long lease for 10 years or more.

If the initial duration is for less than 10 years, but the lease is renewable for a period or periods totalling 10 years or more, such a lease is called a long lease.

A lease for the lifetime of the tenant (or any other designated person) is also a long lease. However, the majority of leases - particularly for urban homes and flats - are short leases.

If you are presented with a written lease, read it carefully before you sign it - and do not hesitate to consult your attorney about any provision that may seem ambiguous or not in your interests.

Some leases consist of no more than an informal agreement between two parties, but there are instances when formal arrangements are essential. For example:

  • A long lease must be registered against the title deeds of the property being leased to be effective against possible eviction by any 'third party', such as a new purchaser of the property;
  • When a property owner and tenant impose their own formalities, the agreement and any variations must be in writing;
  • In KwaZulu-Natal, the former Transvaal and Free State, where old statutes regulate certain leases signed before 22 June 1956.

Calculating the stamp duty

The Stamp Duties Act, 1968, has a complicated formula for calculating the stamp duty on a lease. In complex cases you will need expert advice.

The following explanation is, however, probably sufficient for most simple cases:

PERIOD First determine the duration of the lease.

  • If this has been fixed, say, for one year, you will not have a problem;
  • For an indefinite period - for example, a monthly tenancy - with the rent payable monthly and terminable by one month's notice, the period is fixed at two years;
  • For a fixed period, with a renewal option, the original period and the optional period are taken together to calculate the duration of the lease. Should the option be for an indefinite period, the optional period will be set at two years for the purpose of stamp duty.

RENT After you have worked out the lease's duration, calculate the rent you would have paid in this time. Duty is calculated on the total rent paid for the duration of the lease. For example, a flat with a rent of R900 a month, on a two-year lease would yield R900 x 24 months = R21600. You can calculate the stamp duty on the basis of these rates:

  • A lease for five years or less: 25c for each R100;
  • More than five years, but less than 10 years: 40c for each R100;
  • More than 10 years, but less than 20 years: 55c for each R100.

Note that, should the total rent collected over the period exceed the selling value of the property, the duty will be calculated on the selling price of the property, if the South African Revenue Service agrees.

Here is an example of how to work out stamp duty:

A property owner lets property for a year, giving the tenant an option at the end of that period to turn the tenancy into an indefinite one. The rent is R900 a month.

The period of the lease for the purpose of stamp duty is:

One year, initially.
Plus two years for the indefinite option.
Equals three years, or 36 months.

The total rent is 36 x R900 = R32400. Because the lease is for five years or less, the rate is 25c per R100 of the R32400, so the duty is:

32400 / 100 x 25 = R81

Revenue stamps worth R81 should be attached to the lease.

Warning - Think carefully about 'carpets to be taken over'

Sometimes an advertisement for a flat tolet will contain a proviso, such as: 'carpets and/or curtains to be taken over, R500'. 

Be careful when answering such an advertisement. It usually means that the person advertising the flat is the tenant - not the property owner - and he or she wants to recoup some of the expenses incurred through making improvements to the flat during the period of occupation. This would probably apply especially to older premises.

When you move into a flat, your lease agreement is a contract with the owner for the rental of the property and you are therefore under no obligation to the previous tenant to buy carpets, curtains or any other fixtures or moveables.

Property owner and tenant

The parties to a lease agreement are usually the property owner and tenant. Each has specific duties in law that must be adhered to - unless both have agreed to vary or qualify these duties in particular ways.

In most written leases of residential property, common-law duties will be varied - usually in favour of the owner.

DUTIES OF THE PROPERTY OWNER The prime duty of a property owner is to give a tenant occupation and control of the property. Furthermore, the owner has to maintain the property in its proper condition, subject to fair wear and tear (defined as the 'unavoidable consequence of the passage of time'). The owner must also ensure that normal running repairs to the property are carried out.

A second important duty of the owner is a guarantee that the tenant will enjoy the undisturbed use and enjoyment of the property for the duration of the lease. This duty has three facets:

  • The property owner must not unlawfully interfere with the tenant's rights although he or she is entitled, in certain circumstances, to interfere lawfully if, for instance, the tenant has to vacate the premises temporarily to allow necessary repairs to be done. Although an owner also has a right of inspection, this right must be exercised in a reasonable manner.
  • The owner must protect the tenant against being disturbed by 'third parties' who may claim a stronger right to the property than the tenant. For example, if you sub-let property from a lessee whose lease is invalid (perhaps because it has not been drawn up properly), you could be evicted by the original owner of the property. If this happens, the person who sub-let the property to you is obliged to protect you from being evicted.

If you were evicted (and in most such cases you would be), you would be entitled to sue the person who sub-let the property to you for breach of contract, because he or she agreed to let you have the use of the property - and obviously, if evicted, you would not have that use.

Note, however, that as soon as the original owner (or another 'third party' with a stronger claim to the property than yourself) approaches you, you must notify the person who sub-let the property to you to enable him or her to take timely action in your defence.

At the same time you must vigorously resist the third party's claim.

  • The owner is not bound to protect you against a disturbance of your occupation by a superior force, such as war or an act of God. Usually in a written agreement of lease, total or partial destruction of the premises allows you a rebate in rental and the courts have followed this line.

DUTIES OF THE TENANT As a tenant, you also have duties towards the property owner:

  • Your main duty is to pay the rent. You are released from this obligation only if the owner breaks the agreement or, in certain circumstances, your possession of the property is disturbed by superior forces (such as war or an act of God). The date on which rent must be paid is usually specified in the lease. In the absence of such a provision, the general rule is that rent is payable in arrears - either upon expiry of the lease, or, in the case of periodic leases, on expiry of each period (one month if rent is paid monthly).
  • You must use the property for the purpose for which it was let. If this is not specified in the agreement, you may use it for its 'natural function', as a flat or dwelling. You must always use the leased property in a reasonable manner.
  • When you vacate the property, it must be in the same condition as when you took possession of it, allowing for reasonable wear and tear. If the property is damaged by your guests, servants or children, you are held responsible.

Stamping a lease

In terms of the Stamp Duties Act, 1968, a revenue stamp for a specified amount must be attached to the first page of the document.

Although the lessor (the property owner) must stamp the lease, most leases stipulate that the lessee (the tenant) has to bear the cost of revenue stamps.

Leases are stamped to raise revenue and not as a formality to make the lease valid. If the stamps are not attached and cancelled (by initialling them and adding the date) at the time of execution of the lease, either the owner or the tenant can attach and sign the stamps within 21 days. Even if the lease is not stamped within this period, the contract does not become invalid.

In terms of the Act an unstamped document may not be used for any purpose until it is stamped. The Act makes provision for a fine or penalty to be paid for late stamping (generally, the attachment to the document of penalty stamps equal to the value of the penalty payable).

If the stamps have not been attached and signed within six months of execution of the lease, twice the normal duty will have to be paid in addition to the normal stamp duty. 

The stamps have to be attached in the presence of a revenue officer.

A penalty of three times the stamp duty will be imposed if, after more than six months of the starting date of the lease, the stamps have still not been attached and signed. 

The penalties cannot, however, exceed R2000, nor can they be less than R1. If an incorrectly stamped lease is not voluntarily presented to the revenue officer for correct stamping a penalty of up to R200 may be imposed by the South African Revenue Service.

Protection for the tenant if the property is sold

If the flat or house you are renting is sold by the owner, the protection that you are given against possible eviction will depend on the type of lease you have signed. In so-called short leases (under 10 years) the rule of 'huur gaat voor koop' applies - that is, the contract of lease takes precedence over the contract of sale.

SHORT LEASE If the property is not subject to rent control you are protected from eviction for the period of the lease for as long as you are in residence.

For example, if you have recently agreed, either in writing or verbally, to a year's lease, you will be protected until that lease has expired unless, of course, the lease contains a clause specifying a period of notice.

If the period of the original lease has expired, your lease becomes 'periodic' - in other words, it is governed by the periodic payment of rent. If payment is made once a month, you can be given a calendar month's notice.

If you are not in occupation of the premises, a 'short lease' will still protect your tenancy, as long as the purchaser is aware of the existence of the lease. It will not protect you if you are not occupying the property and:

  • The purchaser is not aware of the existence of a lease;
  • The property was sold to a creditor of the original owner.

If the property is given or bequeathed to the new owner (that is, not having been sold to him or her), then you are protected regardless of whether the new property owner knows of the lease or not or whether you are in occupation or not.

If you are renting property from a person who is not the original owner of the property, but who has 'usufructuary' rights (rights of use and enjoyment) over the property, your tenancy will end if the person loses those rights.

LONG LEASE If you have a long lease (10 years or more), you are protected from eviction by any new owner, provided that the lease is registered against the title deeds of the leased property in the Deeds Registry. The effectiveness of a long lease depends upon the date on which it was concluded. Different rules apply, depending on whether the lease was signed on or after 1 January 1970, or before that date.

If you do not pay the rent

Obviously, if you do not pay your rent, you will have broken the terms of the lease and will have to vacate the property. Furthermore, an owner may also have the right to attach your moveable goods on the property in lieu of rent. This is known as a tacit hypothec.

Unless the lease provides to the contrary, an owner has a tacit hypothec over moveables brought onto the property, and over fruits and crops produced by the property. This is a security for arrear rent; it means that the owner may attach the moveables and have them sold to pay off unpaid rent. The owner can also, in certain circumstances, attach goods on the property belonging to a third party, for example, a hire-purchase company. (See credit agreements.)

Before this can be done, the owner must ensure that the following requirements have been met:

  • The goods must have been brought onto the leased premises with the knowledge and consent of the company;
  • The tenant must have intended to use the goods indefinitely;
  • The hire-purchase company fails to inform the property owner that it is the owner of the goods;
  • The property owner is unaware that the goods do not belong to the tenant (but to the hire-purchase company). The hypothec exists only in respect of arrear rent (not in respect of arrear electricity or similar charges) and only in regard to goods actually present on the leased premises at the time.

Moving out

A lease usually ends in the same way as any other contract: when the agreed duration ends, cancellation following breach of contract or by mutual agreement. Note that there are also three special circumstances in which a lease may be ended:

The pitfalls of sub-letting property

Sub-letting - whereby the tenant under the first lease becomes the sub-lessor - is the same as an ordinary contract of lease. The original lease continues to regulate the relationship between the parties who agreed to it - for example, an agreement to pay rent once a month. 

Because the two agreements are separate, the owner of the property cannot enforce any rights against sub-tenants, who must pay rent to the original tenant, who, in turn, pays rent to the owner. The owner cannot claim any payment from the sub-tenants. Once the original lease expires, however, the owner may eject the sub-tenants, as the sub-tenants' rights depend on the lease of their sub-lessor (in this instance, the original tenant).This does not apply if the premises are rent controlled, when neither the tenant nor the sub-tenant can normally be ejected. If a lease does not specifically prohibit sub-letting, a tenant may sub-let the property, provided that it is not rural property and/or land. However, the proposed sub-tenant must not be a person to whom the owner could reasonably object.

A tenant who sub-lets property in violation of a clause in the lease that forbids this is guilty of breach of contract. This will entitle the owner to terminate the lease and eject the sub-tenant, even if there is no cancellation clause in the lease.

TERMINATION BY NOTICE If you have a lease on a property for a fixed period, but you have to leave before the agreed time, tell the owner or the agent as soon as possible. He or she may be able to find another tenant to replace you. Remember, though, that even if you do not occupy the property, you will be liable for the rent until another tenant leases the property.

In the case of a 'periodic' lease - of indefinite duration, but where the rent is payable at fixed intervals - the lease is terminated by notice given by either the owner or the tenant. This would be the case where a tenant remains in occupation after the written lease has expired. If no notice period is set out in the lease, 'reasonable notice' must be given.What is 'reasonable' is usually determined by the 'periodic' payment of rent (hence the description 'periodic lease'). If, for instance, rent is payable on a monthly basis, a calendar month's notice must be given.

TERMINATION BY DEATH A lease terminates on the death of one of the parties in the following circumstances:

  • If it is provided for in the lease;
  • If the lease stipulates that the owner can terminate the agreement whenever he or she wishes and the owner dies.
  • If the lease provides that the tenant can terminate the agreement whenever he or she wishes and the tenant dies.

TERMINATION BY INSOLVENCY A lease does not end if the owner becomes insolvent.

Should the property be sold, the sale is still subject to the lease under the rule of 'huur gaat voor koop' whereby the contract of lease takes precedence over the contract of sale. This does not apply to long leases.

If the tenant becomes insolvent, the trustee of the insolvent estate may terminate the lease by written notice to the property owner. The trustee must, within three months of being appointed, inform the owner if the lease is to continue and go on paying the rent in time. If this is not done, the lease is terminated.

Disclaimer :: You and Your Rights
Although we have gone to great lengths to ensure the accuracy of the information contained in this database, it is important to remember that laws, government departments, interest and taxation rates are constantly changing. If you have a particularly difficult problem you are advised to consult a qualified legal authority. The publishers, editors and their representatives cannot accept responsibility for any act or omission arising from consulting the information contained herein.
PLEASE SIGN IN
 USERNAME:
 PASSWORD:
 
GET OUR NEWSLETTER
 YOUR EMAIL ADDRESS:
 
  FRAUD PREVENTION
  WE ARE TRACKING YOU
General Disclaimer: The content of Legal City does not constitute legal, tax or financial advice, nor does it necessarily reflect the views of our management, staff, shareholders, associates, contributors, authors or suppliers. Even though every endeavour has been made to ensure the accuracy of this information we cannot be held responsible for any errors and/or omissions. By using this web site you agree to accept and abide by our terms and conditions.
This web site and all its content is copyright © 2000-2014, Legal City CC • Web site managed with qPortal Content Management v 4.0.0 • This page loaded on October 23, 2014 at 2:37:38 am, SA Standard Time.