As we are always at pains to stress, eviction law is there for the protection of all parties' interests. Just as no one wants to see a family unnecessarily or unfairly made homeless, landlords also have the right to receive a fair rent, on schedule, for the use of their property, and to expect their property to be properly maintained and well looked after.
In this post we will look at a landlord's right to cancel a lease and to claim damages. In the next post we will look at the tenant's right of remission of rent, that is, the right to set off rent payable against compensation due by the landlord.
Lease cancellation – breach of lease
If a tenant fails to pay rent, and there is reason to suspect that the tenant may not pay future rent, the landlord may cancel the lease. However, it is not as simple as that. Whether or not the court grants the cancellation depends on the wording of the lease. For cancellation to be justified, the failure to pay must represent a major breach of the lease. And for that to be upheld, the lease must contain a forfeiture clause, i.e., an indication that prompt payment is of major importance. The wording might include "time is of the essence of the contract".
If the lease contains a forfeiture clause, the landlord is permitted to cancel the lease on the first occasion when the tenant fails to pay rent. However, if the landlord regularly accepts late payment, they cannot then use this as a reason for cancellation, because they have given their tacit approval in the past. In this case the landlord must give the tenant prior notification if they intend to cancel the lease.
Don’t forget the CPA
Bear in mind that the Consumer Protection Act (CPA) requires “residential landlords” to give tenants 20 business days’ notice of the need to vacate a property. According to section 14 of the CPA, If your tenant is in material breach of the lease, you can’t cancel the lease without giving 20 business days’ notice, and you can’t cancel the lease if the breach is rectified within those 20 days. The Rental Housing Act does not contain such a prescriptive clause, but the CPA takes precedence over other legislation. See Consumer Protection Act & Rental Agreements Explained for more information.
Month-to-month or open-ended leases
The landlord must give the tenant "reasonable" notice of termination of the lease. A calendar month’s notice would satisfy the 20 business days required by the CPA and would be considered reasonable.
Different rules apply when the lease is for public housing. Recent case law established that to terminate a public housing lease agreement on just one month’s notice would be oppressive and unconstitutional. Therefore, a tenant of public housing should be afforded the chance to rectify a breach prior to lease cancellation.
If a lease expires and the tenant continues to pay rent, and the landlord continues to accept it, they have effectively created a new, implied lease. There are also certain fixed-term leases that become implied month-to-month leases after expiry, in terms of the CPA. By law, the payment and acceptance of rent after the official end of the lease implies that a new lease has been agreed.
Landlords are allowed by law to claim damages in lieu of unpaid rent, in addition to cancelling the lease. The landlord may claim the rent for any period prior to cancellation and damages for the period thereafter, i.e. if the landlord is deprived of rental income due to an inability to immediately find an alternative tenant . The landlord may accept payment of rent prior to cancellation, and can still lawfully proceed with the cancellation. If the landlord accepts rent after cancellation for any period the tenant remains in the property, this does not mean that the landlord has revoked the cancellation. This is called "holding over". This might happen if, for example, a landlord gives a tenant a grace period to find alternative accommodation, but does not wish to retain the tenant permanently.
The law regarding damages is technically complex and it is impossible to cover all the variations in this short article. If you have questions about damages relating to an existing lease give us a call and we will investigate your specific circumstances.
Municipal charges – surety
Property owners should note that they cannot sell a property without a clearance certificate from the local authority, stating that all municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties have been paid – for two years preceding the date of application of the certificate. Any outstanding charges take precedence over a bond registered against the property.
What this means in practice is that landlords act as sureties for tenants, because property owners are held liable for the municipal accounts of the tenants. Furthermore, local authorities don't go out of their way to collect debts from account holders because, ultimately, owners can be compelled to settle the accounts when there is a sale of the property at a later date. Thus the terms of the lease are critical; they should ensure the monitoring of the tenant’s payment of municipal charges, and allow for forfeiture clauses and damages in case of default. There is an argument for asking for a larger deposit, i.e. more than one month's rent, in light of the risks involved, and this should not be considered unfair practice in terms of the Rental Housing Act.
Take professional advice
Eviction law must be navigated with care and professional expertise. If the proper process is not followed, you can find yourself in breach of the Rental Housing Act, PIE or the CPA. Simon Dippenaar and Associates are experts in property law and we act for both landlords and tenants, so we understand the legislation from both sides. We will help you manage your rental property and tenant relations efficiently and in full compliance with all relevant regulations.
Contact Simon on 086 099 5146 or email email@example.com.