Landlord is selling – what are my options?

If your landlord decides to sell the property you  are renting, do you have to move out?

According to Adrian Goslett, regional director and chief executive of RE/MAX of Southern Africa, the law does not prevent owners from selling their properties while they are being let to a third party. However, the lease agreement supersedes the sale.

“Essentially this means that the tenant can remain in occupation of the rental property until the lease agreement lapses,” he says.

“Although there is no obligation for the tenant to move out of the property, the change in ownership could bring about anxious feelings at the prospect of having to deal with another landlord or the renewal terms of the lease with the new owner. There is also the matter of the new owner’s intentions. If the home was not bought as an investment property, but rather a primary residence, the new owner will not want to renew the lease as he will want to take occupation as soon as possible.

“Instead of waiting out the lease, you may want to find alternative accommodation sooner rather than later. If this is the case, you will need to read through the lease agreement to see what it says about early termination. It is possible for there to be 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 you the right to cancel the contract should the property be sold. If these are the terms and there is mutual consent, you are absolved from any penalties that may arise due to a breach of the agreement.”

If no such sale stipulation exists, then all terms and conditions of the lease before the sale of the property will be carried over to the new owner, making it far more difficult for you to get out of. The lease agreement will remain in effect under the new landlord, and you will be obligated by law to respect the stipulated terms, as will the new landlord.

If you decide to leave before the lease ends, you will be regarded as being in breach of the contract and could face paying a penalty of some kind. An investor may have bought the property with the intention of retaining you as tenant. In this situation, he will be less likely to release you from the lease agreement,” says Goslett.

Regarding 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. Section 14 of the act regulates these matters.

In these circumstances, tenants can give notice of 20 business days during the term of the lease. However, they would then be liable for the notice month and possibly a reasonable penalty fee. It is important to bear in mind that if the landlord and tenant are both juristic persons, the CPA cannot be applied.

“Before making any decisions regarding cancelling the lease agreement, tenants should discuss the matter with the new landlord. There could be little or no need for concern. The sale of the property might only take place after the lease agreement has expired, or the new landlord may be preferable to the current one,” Goslett concludes.