select
|

The landlord is selling, what are my rights?

Many tenants may find themselves in a situation where the landlord decides to put their rental property on the market. What rights does the tenant have if this happens? Are they within their right to breach the lease agreement that they have in place with the landlord?

Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that according to South African legislation a landlord is not prohibited from selling the rental property to a third party while the property is occupied by a tenant and there is a leasing agreement in place. “However,” says Goslett, “in terms of the legal principle huur gaan voort koop, the lease agreement precedes the sale. As a result the tenant is within their right to retain occupation of the property for the remainder of the agreed upon lease period.”

He adds even though the tenant can stay for the remainder of the of the lease agreement, some may feel anxious about possibly dealing with a different landlord or the renewal terms of the lease with the new owner. Another concern is what the new owner intends to do with the property. It is possible that the new owner intends on living in the property themselves, rather than letting it out.

“If the tenant finds themselves in such a situation, they might want to find alternative accommodation as soon as possible. However, the tenant’s right to terminate the agreement will largely be determined by the contract that they signed and what the law stipulates. The initial step would be for the tenant to read their lease agreement to see where they stand and what obligations they have contractually bound themselves to. In certain cases, there may have been a sales provision made in the agreement for such a situation,” says Goslett. “If agreed upon at the signing of the lease, there might be a stipulation giving the tenant to cancel their current contract should the property be placed on the market.  If these are the terms and there is mutual consent, the tenant is absolved from any penalties that may arise due to breaching the agreement.”

If no such stipulation exists, Goslett advises that all terms and conditions in the lease before the sale of the property will be carried over to the new owner of the property. Essentially what this means is that it is far more difficult to get out of the contract, if nothing has been specifically stated in the lease with regards to the sale of the property. In this case, if the tenant breaches the lease agreement they could face paying a penalty of some kind. “The lease agreement will remain in effect under the new landlord and the tenant will be obligated by law to respect the stipulated terms, as will the new landlord.

“It is possible for a buyer to purchase a rental property with the intention of retaining the tenant.  If this is the case they will more than likely not want to release the tenant from their contractual obligations,” says Goslett.

In terms of the Consumer Protection Act (CPA), a fixed term contract within the fixed term can be terminated early on the condition that the new owner is a supplier who lets property in the ordinary course of his business. This is regulated by section 14 of the Act.  In these kinds of situations a tenant is able to give a 20 business day notice period during the term of the lease. However, they would then be liable for the notice month and possibly a reasonable penalty fee. Goslett says that the CPA will not be applicable if the parties to a lease agreement are both juristic persons. 
 
“Ideally, before the tenant makes any decisions about cancelling their lease agreement, they should first communicate with the landlord. Discussing the matter could help put certain issues to rest and there may be little or no need for concern. There is the possibility that the sale of the property only takes place after the period of the lease agreement has expired, or the new landlord may be better than the current one,” Goslett concludes.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
    • 22 Nov 2017
      While sales have noticeably slowed in most sectors in most Cape town suburbs, the security estate sector in Constantiaberg has bucked the trend by remaining buoyant, with sales by August this year already surpassing total sales in 2016.
    • 22 Nov 2017
      The end of the year is fast approaching, and so are all the travellers, tourists and holidaymakers. For those who live near or own a property in a holiday-hotspot, the festive season also brings with it an abundance of short-term rental opportunities. Its a great way for property owners to make a few extra rand for their own holidays or to put towards their savings.
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
    • 21 Nov 2017
      When an offer to purchase a property is signed by both buyer and seller, this constitutes a binding agreement or “Deed of Sale” between the two parties. However, in most cases the “standard contract” might not be enough to cover all the specifics pertaining to the sale. The agreement may require some additions or alterations to clauses, which needs an expert hand in the drafting of such
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK