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Wednesday Jul 31, 2013

If no date is set for rental payment, common law applies

Sections 5 (6) (d) of the Rental Housing Act (the act) states that a lease must include, among several requirements listed, 'the frequency of rental payments if not paid monthly'; in other words, whether rental is payable daily, weekly, yearly or whatever period agreed between the parties.

The act does not mention what parties ought to do if the date of payment is not stipulated, or agreed upon.

Here, one has to turn to the common law, since the act did not change the common law rules relating to payment of rentals.

In terms of section 13 (6) (g) of the act, the Rental Housing Tribunal in its deliberations to formulate a ruling, must have regard to the common law if a particular matter is not specifically addressed in the regulations or a lease.

What rules would then apply when there is no agreement about the date rentals are payable?
(a) If the parties agreed that rental was payable in advance, but failed to stipulate a date, then in the case of a monthly lease, the rental is paid on or before the first day of the month in terms of common law.

(b) If the rental is payable in arrears, then it must be paid on or before the date agreed, or on or before the last day of a periodic lease: at the end of the month, day, week or year.

In Lee Sharone v Ide Technologies and Another 2007 (2) BLR 531 (HC), the Lobatse High Court stated that where the lease was silent as to whether the rentals were payable in advance or in arrears, rental was payable at the end of each period in terms of the common law.

In the case of a periodic lease, rental would be paid on or before the last day - before the next period begins, for example, a monthly lease.

In a fixed-term lease, it would be paid at the end of the term, for example, a lease for six months where rental for the fixed period becomes due and payable at the expiration of the lease.

In Buys v South Rand Exploration 1910 TPD 1058, the Supreme Court of the Transvaal held that the landlord was justified in cancelling the yearly lease since the tenant paid after January 7. The lease was renewable each year upon the tenant paying the annual rental on January 7, but would lapse if rental was paid after that date.

It must be understood that there is no 'period of grace', unless such a period is agreed upon by the landlord and the tenant, either explicitly or by implication.

Failure to pay on the agreed date or the due date in terms of the common law rule will constitute a breach. A period of grace may be set out in the following terms in a lease where the parties agree that rental is payable on the first day of each month:
'Should the lessee fail to pay the monthly rental within 15 days after same shall have become due, the lessor shall thereupon have the right to cancel this lease.'
This clause was the subject matter in National Bank of SA, (apellant) v Leon Levson Studios (respondent), 1913 AD 213.

Leon Levson Studios failed to pay on December 1, 1912, but paid on the Tuesday, December 17, since Monday 16 was a public holiday.

The court held that under ordinary circumstances, where there is nothing to prevent it, payment should be made on the day stipulated, although it happens to be a Sunday or a holiday. But it is very different where payment is to be made at a place of business that is closed to business on those days.

In this instance, the place of payment was the bank and because it was closed on Sunday and Monday, the court held that the tenant was not in default when he tendered payment on Tuesday.

The appeal by the landlord National Bank of SA was dismissed with costs.

Sayed Iqbal Mohamed
Chairman of the Organisation of Civic Rights
Tenant Issues
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For tenant's rights' advice, contact Loshni Naidoo or Pretty Gumede at 031 304 6451.

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