Lessors and landlords – do they hold all the cards?

It is not unusual for lease agreements to contain clauses providing that lessees who want to sublet or to cede and assign all their rights and obligations in terms of the lease agreement to a third party may only do so having first obtained the prior written consent of the lessor, whose consent will not be unreasonably withheld.

Interestingly, the applicable case law suggests that the use of such a clause in this context will not be treated as an enforceable term of the agreement but, rather, as a mere proviso or qualification to the lessee’s obligation not to sublet or assign the lease without the lessor’s consent.

Although some may argue that this does not seem in keeping with the development of our contract law, the failure on the part of the lessor to (reasonably) consent, consequently, does not amount to a breach by the lessor and contractual damages can, therefore, not be claimed by the lessee.

In terms of this approach, an aggrieved lessee’s remedies would, instead, be to proceed to sublet or assign notwithstanding the lessors refusal and then to defend any proceedings by the landlord on the basis that his refusal was unreasonable. Alternatively, the lessee could approach the court for a declaratory order declaring the lessee to be entitled to sublet or assign notwithstanding the lessor’s refusal to consent. It ought to be borne in mind, and while often a matter of contractual interpretation, that nothing prevents a lessor and a lessee from agreeing, if phrased properly, that the lessor is under a positive obligation not to withhold consent unreasonably.

Whether as a means of expressing its misgivings, the court in Kouga Municipality v De Beer and Another 2008 (5) SA 503 (E) refrained from deciding “to the effect that when the lessor has unreasonably withheld his consent the lessees are restricted to sublet without consent and resist legal action taken by the lessor or to approach the court for declaratory relief (is) correct or not” (paragraph 10).

Interestingly, this case is authority that a decision to unreasonably withhold consent by an organ of state (a municipality in this instance) will potentially constitute administrative action capable of being reviewed and set aside. This appears to open the door to the possibility of obtaining constitutional damages by reason of the organ of state’s breach of its constitutional duty to act lawfully where, conceivably, such constitutional damages would be difficult to quantify. Given the fact that the Constitutional Court has recently shown its penchant to develop the contract law, the issue of unreasonably withholding consent may yet receive its attention.

The lesson to be learned by clients, particularly if they are tenants, is to define their rights and obligations clearly before entering into a lease agreement and while they still have some bargaining power. It is imperative to be as pedantic as possible before you sign on the dotted line.

(Article by Lionel Egypt and Jennifer Begg - Lionel Egypt is a director, and Jennifer Begg a candidate attorney in the dispute resolution practice at Cliffe Dekker Hofmeyr)

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 22 Jun 2018
      The rental market in many Johannesburg suburbs has shown encouraging signs of revival this year but it remains a competitive market and landlords who best cater to their market’s needs will reap the healthiest returns.
    • 22 Jun 2018
      Home design is constantly evolving to reflect the changing needs of society. We look at some of the ways in which our use of space is changing.
    • 22 Jun 2018
      While estate agents can help the seller with correctly pricing the property and marketing a property to the right pool of potential buyers, at the end of the day it’s the impression that the property will make on buyers that counts the most.
    • 21 Jun 2018
      Anyone who’s ever been involved in a building project that’s gone wrong will appreciate the importance of adequate insurance cover in the construction industry.
    • 21 Jun 2018
      A recent news story about a blind tenant caught in a legal battle with his body corporate over letters and notices he was unable to read and consequently comply with has raised the question: what are the legal obligations for landlords with disabled tenants?
    • 21 Jun 2018
      A trend that’s taken the world by storm in recent years is that of hygge (pronounced: hue-guh), a Danish concept that is about creating intimacy, connecting with loved ones and taking pleasure in small, ordinary things.
    • 20 Jun 2018
      Buying or selling real estate isn’t as easy as it is portrayed sometimes, especially if there is a death of a party during the transaction which can make it awkward, tricky and inconvenient.
    • 20 Jun 2018
      With interest rates remaining at historic lows and banks continuing to compete for mortgage finance business, first-time buyers with funds at their disposal are currently well-placed to gain that initial foothold on the property ladder, particularly in the light of the slightly lower growth rates currently experienced in residential property values.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us