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Wednesday Oct 16, 2013

Fixed-term property lease should protect all parties

A fixed-term lease agreement between a tenant and landlord provides security to both parties, assuming that both are in position to honour all the terms and conditions contained in the agreement.

Let us take a five-year lease, which would give the tenant security of tenure and assure rental income for the landlord for the duration of the lease.

If the landlord prematurely terminated the lease without any legal basis, the tenant could sue. The landlord would have the right to sue as well if the tenant, without legal cause, decided to vacate the premises (dwelling or commercial property).

Should the lease contain a clause that stated that any variation or changes to the original agreement were binding upon the parties only if it was reduced to writing and signed by both parties, no verbal agreement would be of any legal effect.

What would happen if the landlord decided to increase the rental before the lease came to an end, and served a notice to the tenant? But under the lease, rental for the five-year period was fixed and there was no clause allowing for any escalation.

If the tenant refused, the landlord would have to wait for the full term.

However, if the tenant agreed and signed an addendum prepared by the landlord to the effect that the tenant agreed to pay an increase and that the parties had agreed to alter the relevant clause dealing with rental, or inserted a new clause allowing for an annual escalation, a new rental agreement would take effect.

The tenant, on hindsight, then informs her landlord that she wants to revert to the original terms, but the landlord is disinclined, so she is compelled to abide by the new rental agreement.

Should the tenant refuse to honour the new alterations, she would be a guilty of a breach.

It is, therefore, advisable to seek legal help before making any change and before signing a lease agreement.

Often, the phrase 'I signed under duress' is used by tenants, in which instance the tenant would have to prove that such was the situation.

In a sense, what most tenants mean is that if they refused, notwithstanding their legal rights, the landlord, because of the undersupply of housing, has the advantage.

A consumer lease deprives a landlord of security while providing protection to a tenant.

Where the Consumer Protection Act applies, the maximum period is two years for a fixed-term lease.

The tenant of a consumer lease can terminate a fixed lease by giving 20 business days' written notice to cancel a long lease.

A landlord must notify the tenant in writing that the lease is to end by providing 40 to 80 days' notice before the expiration of the lease ('hybrid lease').

The lease thereafter becomes a monthly periodic lease - unless it is renewed for a further 24 months, if the landlord can show that such a fixedterm period would benefit the tenant.

Sayed Iqbal Mohamed
Chairman of the Organisation of Civic Rights
Tenant Issues
Daily News

For tenant's rights' advice, contact Loshni Naidoo or Pretty Gumede at 031 304 6451.

 
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