Tenants’ right to cancel lease at short notice could be disastrous for landlords

Attorneys throughout South Africa are now working at providing clients with some means of protection from the ramifications of the new Consumer Protection Act – and nowhere will this be more necessary than in lease agreements, especially property leases.

This is the view of Trudie Broekmann, a director in Gunstons Attorneys’ commercial division. Broekmann says that Section 14 of the new act makes it possible for any tenant who is not a juristic person to cancel any fixed term lease simply by giving 20 business days’ notice in writing. This applies to individual tenants acting on their own behalf, and not close corporations, companies, trusts or partnerships.

“This section of the act is likely to play havoc with landlords’ financial planning and may prevent them from using long term leases as security for finance,” says Broekmann.

“Provision is made for a cancellation fee, but the act stipulates that this must not be ‘more than is reasonable’. This wording is very vague, even though the regulations include a fairly long list of criteria by which to evaluate what a ‘reasonable’ fee might be.

“Perhaps the most important criterion here is that the fee has to take into account ‘the reasonable potential for the landlord acting diligently to find another tenant’ – and the time that this is likely to take in the current rental market.”

She says as things stand it does seem that it will not be possible to calculate the cancellation fee upfront. She recommends that the lease should simply indicate that the landlord is entitled to charge the maximum permitted cancellation fee. It may also be possible to insert a clause requiring the tenant to keep on paying rent until a replacement is found, where this is reasonable from the perspective of the tenant and does not have the effect of negating the tenant’s cancellation right.

“The likely consequences of the new rulings will be that landlords will bend over backwards to get tenants who are juristic persons and therefore do not have the right to this arbitrary cancellation of a lease. An additional difficulty here, however, which very few commentators have so far picked up, is that juristic tenants will still have the right to cancel leases at short notice if their landlord is an individual and not a juristic person.

“In general, however I predict the effect of the act will be to make landlords insist that tenants lease through a company, close corporation or other legal entity. With the new Companies Act in place, acquiring and running a company is far less complicated than it used to be and need not be expensive.”

Gunstons Attorneys is now working on the redrafting of many lease agreements. In particular, she says, they want to limit the legal risk for landlords as much as much as is permitted under the Consumer Protection Act.

“Where we are acting for tenants, we are inserting provisions to protect against the automatic renewal of fixed-term leases which the act appears to introduce. Obviously this act is still in its early days and it is likely that we will find other ways in which we can protect clients contractually,” says Broekmann.

Another problem likely to arise from the new legislation, she says, is that the 20 business day cancellation clause will inevitably cause many leases to end midway through the month. This will complicate payment and administrative matters and make it harder for landlords and estate agents to fill the empty properties promptly.

Broekmann assumes that, on cancellation some discussion between the landlord and the tenant will have to ensue, but nothing is laid down on this matter in the act. She says she has noticed that landlords and estate agents see the new legislation as disastrous, particularly if they are handling large portfolios. However, with the assistance of an attorney who understands the Consumer Protection Act, a landlord or agent can formulate and implement a simple procedure which avoids many of the legal risks created by Section 14.

There are divers treatment options for numerous soundness problems. Usually the remedies you searched for can more than one listing. Each listing is specific to each dose of drugs so it is significant that you select the appropriate version. There isn’t anything you can’t get on the Internet anymore. You can get remedy to treat acute treatment of the symptoms of rheumatoid arthritis or spasticity. Cialis is used to treat many types of medical problems. What about is there generic cialis and sexual existence? What about sexual soundness and is there a generic for cialis? Erectile dysfunction, defined as the persistent inability to achieve a satisfactory erection, exerts an estimated more then twenty millions men in the America alone. Young men with sexual dysfunctions need professional help. Ordinarily in this situation, cognitive behavioral therapy is the treatment used. Why it happen? How common is erectile malfunction? Unfortunately nearly all prescription drugs have sometimes objectionable aftereffects, from headache to death. No doubts you need to take undesirable side effects in consideration before purchasing the remedy. Follow all directions on your prescription label.