Commercial tenants' responsibilities defined

It is, says Leon Breytenbach, National Manager of the Rawson Property Group’s commercial division, surprising just how often those who rent property, whether as owners or managers, are confused about their respective responsibilities.

A review of the tenants’ obligations is therefore often called for and if possible the landlord or agent should go through these with the tenant before he takes occupation.

The tenant, says Breytenbach, is responsible for the payment of two deposits right at the outset. The first deposit goes towards the monthly rental, the second towards the municipal services.

Some landlords, he says, can be ‘sneaky’ and base the deposits on the amounts payable at the end of the lease term (by which stage rental escalations would have kicked-in). This is not illegal in anyway, but the norm is to base the deposits on the monthly rental or expected municipal expenses charged in the first year. On the renewal of a lease the deposit can be increased in line with the escalated rentals. 

With residential property, when deposits are taken, such deposits need to be invested in an interest-bearing account and the interest distributed for the benefit of the tenant. With commercial leases, this is often not the case and there is a growing tendency for those owning or administering commercial property not to pay interest on deposits. 

When it comes to paying the monthly rentals on commercial property VAT is almost always charged whether or not the tenant is VAT registered.  However the tenant, says Breytenbach, should check whether the owner, landlord or managing agent is in fact registered for VAT and ask for proof thereof. He points out that it is a criminal offence for VAT to be charged if the person charging it is not VAT registered.

The tenant is also responsible for paying monthly municipal services incurred on his property.  This includes the connection and reconnection costs and all the monthly water, electricity, sewerage and refuse accounts, again including VAT. These accounts, says Breytenbach, are often sent to the owner or the landlord, who then bills the tenant separately to cover them and this arrangement can help ensure that the services are not cut off and transfer is not held up if the property is later sold. 

Another important tenant responsibility is the maintenance of the interior of the property.  Allowance is made here for ‘wear and tear’ but differences of opinion quite often arise as to the interpretation of this phrase. It has to be accepted, says Breytenbach, that the work of some tenants is far harder on the building than those of others and the likely damage should be taken into account from the outset. A proper inspection coupled with documentary proof or photos , taken prior to the tenant occupying the property, can also be used as a solid base on which to establish any “wear and tear” calculations during the period of the lease.

Breytenbach points out, too, that the tenant is responsible for informing the owner or landlord timeously of anything affecting the property, particularly maintenance tasks that become necessary.  The tenant is also obliged to give the landlord access to the property to check on its condition and arrange for maintenance to be done.  These visits by the landlord have to be made at reasonable times and he is obliged to give adequate notice when he intends to visit and be willing to make changes to his proposed times if they do not suit the tenant.

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