Huur gaat voor koop

When a tenanted property is sold, what rights do the tenants have with regards to cancelling the lease or enforcing it?

Sunell Afrika, rentals manager for SAProperty.com, says the legal clause “huur gaat voor koop” is in force in this instance, which means the lease takes precedence over the sale of the property and the tenants have the right to remain for the full duration of that lease.

“The conditions of the existing lease do not fall away, and if it has not been cancelled the tenants and the new landlord are bound by these until the lease is renegotiated or expires,” she says.

“The deposit held by the previous landlord must be transferred to the new owner, and the same rule would apply as with the previous landlord. The deposit must be held in an interest bearing account in favour of the tenants, to be refunded to the tenants with interest when they move out.”

On the other hand, she said, if the tenants decide they would no longer like to live on the property if there is a new landlord, the conditions of the lease could also prevent them from leaving the new landlord in the lurch and cancelling the lease.

If the tenants do decide to cancel the lease they may incur a penalty, and although the Consumer Protection Act allows tenants to cancel – if the landlord is a supplier according to the CPA and lets property in the ordinary course of business – giving 20 business days’ notice, there is still a “reasonable” penalty that the landlord can charge the tenants.

“If for any reason, whether on the part of the landlord or tenants, the lease is to be cancelled once the property is taken over by the new owner, it must be by mutual consent and the first course of action is to have open communication between the two parties so that an agreement can be reached without either party put at risk financially.

“Usually the penalty that would be charged to the tenants would be the cost of finding new tenants and one month’s rent, which is how long it might take the landlord to find new tenants – which is reasonable. In the case of the landlord being the one who would like to cancel the lease, the tenants should be given enough time to find new premises, which should perhaps also be one month,” says Afrika.

Call Sunell Afrika on 073 002 6481 or email  sunell@saproperty.com.