Landlord is selling, what are your rights?

A situation may arise where a tenant finds him/herself in a situation where the landlord would like to put their property on the market. So just what happens to tenants if this happens, and are they within their rights to breach the lease agreement in this circumstance?, asks Adrian Goslett, CEO of RE/MAX of Southern Africa.

South African law states that a landlord is not prohibited from selling the property to a third party, while the property is housing a tenant and a lease agreement is in place. However, in terms of the legal principle huur gaan voort koop, the lease precedes the sale and therefore the tenant is entitled to retain occupation of the property for the remainder of the lease period. “While a tenant is able to stay in the property for the duration of the lease, some may feel a lot of uncertainty around dealing with a different landlord or the renewal terms of the lease with the new owner. There is also the matter of what the new owner intends to do with the property, as they may not want to continue renting the property out and could want to move into the property themselves,” says Goslett.

He adds that some times in these situations tenants might want to find other accommodation. However, a tenant’s right to cancel their lease will largely be determined by the lease agreement that they signed and the law. “For this reason,” says Goslett, “reading the lease agreement is the first step when it comes to knowing where you stand with regard to your rights and obligations should the property be sold. In some cases landlords and tenants may have agreed to a lease with a sales provision in order to give both parties flexibility should the situation arise. The lease may stipulate that the tenant has the option to cancel their current lease and find another place to stay if the property is 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 breaking the agreement.”

 According to Goslett, all the terms and conditions in the lease before the sale of the property will be carried over to the new owner of the property. What this means is that if nothing is specifically stated in the lease regarding the sale of the property, it will be a lot more difficult for the tenant to break the agreement without suffering the consequences of a penalty.  The lease will simply 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. “In certain cases the purchaser will buy a property with an existing tenant with the intention of retaining that tenant. If this is the case they will more than likely not want to release the tenant from their contractual obligations,” says Goslett.

He points out that the Consumer Protection Act (CPA) does allow for the early termination of a fixed term contract within the fixed term 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 this case a tenant can 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. It should be noted that the CPA will not be applicable if the parties to a lease agreement are both juristic persons,” says Goslett. 
Before making any decisions regarding terminating a lease prematurely, tenants should first speak to the landlord. “Discussing the matter with the landlord could help to alleviate concerns regarding the sale of the property,” says Goslett. “Tenants should also bear in mind that the conclusion of the sale might only be after the end of the lease term, or the new landlord may be better than the current one,” he concludes.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us