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Thursday Feb 05, 2015

Landlords may sue for breach of contract

When a tenant cancels the lease prematurely, the landlord can accept this breach as the tenant's refusal or abandonment to perform the duty or obligation.

This is legally referred to as a repudiation of a contract.

The landlord can claim damages he or she might have sustained as a result of the tenant's breach by holding the tenant liable for rental for the remaining period of the lease.

The tenant is likely to forfeit the security deposit, and if this amount is less than the monthly rental, the landlord can sue for the balance and any damage suffered.

If the landlord finds a replacement tenant immediately, he is obliged to refund the full deposit.

The landlord, in this instance, will also have to abandon any claim for future rentals.

The legal argument is that the landlord did not suffer financial prejudice by re-letting the dwelling and receiving a security deposit from the new tenant, even though the previous tenant vacated the dwelling prematurely.

In terms of the Consumer Protection Act, certain restrictions prevent the landlord from relying on these common law remedies.

The tenant may terminate a lease prematurely by giving proper notice, 20 business days.

This would not constitute a breach but the landlord is allowed to recover costs for early cancellation.

The penalties must be reasonable and may include all expenses incurred in securing a new tenant. This is not to punish the tenant, but to allow a landlord prejudiced by the early cancellation to impose a penalty. (For details on penalties, refer to article "Compensate for breach of contract, penalty is to recoup losses", July 1, 2014).

Lefentse Vera Mpahahlele concluded a one year lease with a letting agent, Apartment Box Pty Ltd for unit 77 Woodridge Estate, 176 Blamey Road, Montclair.

The lease was for one year, from July 1, 2014 to June 30, 2015 at a monthly rental of R5 237 and a damage deposit of R5 237.

Mpahahlele gave notice of her intention to cancel five months into the lease, failing to give the notice of 20 business days as required.

She therefore cancelled her fixed-term lease prematurely, having moved out on November 30, 2014. She was required to pay R10 474.00, a cancellation fee equivalent to two months' rental.

Mpahahlele gave short notice, which prevented Apartment Box from advertising the property since it did not come up on its lease end sheet.

Mpahahlele was subsequently asked to pay R7 000 and also forfeit her deposit of R5 237. In other words, Mpahahlele was expected to pay R12 237 for the early cancellation.

Correspondence between Mphahlele and Bayley Holley of Apartment Box confirms that a tenant was recommended by Mphahlele, who then attended to the "application form to let" with the new tenant.

The new tenant took occupation from December 1, 2014.

Holley refused to comment why Mphahlele's deposit was not refunded and how it arrived at a claim of approximately R12 000 when no loss was sustained.

A new tenant took occupation immediately and paid the lease cost. These and other questions were referred to the property management director of Apartment Box, Julian Redfern.

Some of the other questions and concerns raised by Mphahlele included the following that were followed up with Redfern:

1. How did Apartment Box reconcile the provisions of its lease that favours the landlord in violation of the Consumer Protection Act and the Rental Housing Act?

2. In addition to the interest of 2 percent above the prime lending rate for late payment, Apartment Box had a claim for R150 if the rental was not paid by the 3rd day it was due; R300 if rental was not paid by the 6th day of the month it was due. These were cost contribution, inter alia, for collecting the arrear rental.

3. Additionally, R100 would be debited to the tenant's account each time a letter of demand was made for outstanding rental.

4. The landlord and Apartment Box absolved themselves from any liability for injury or damage caused to the tenant, tenant's family or visitor or for loss suffered due to the landlord's or the agent's negligence or by reason of default. This was contrary to the Consumer Protection Act.

5. The tenant cannot lodge a complaint with the Rental Housing Tribunal without agreeing to a meeting with the agent.

If the complaint was unsuccessful, the landlord was entitled to R450 per hour (excluding VAT) for the recovery of his time, travel, loss of income and representation cost. No such remedy is available to the tenant in the event the landlord loses his case.

6. Landlord or agent is authorised to remove and sell or donate the tenant's personal goods once the lease has expired or is cancelled. This, it would appear, can take place in the absence of a court order or without following the legal process.

7. Landlord can cancel the fixed lease by giving three months' notice in the event he intends to sell the property but incurs no penalty to compensate the tenant.

While waiting for a response for this article, Mphahlele received an e-mail from Bradley Nirmalparsad in charge of credit control at Apartment Box, informing her that her landlord agreed to charge R1 044.78 being pro-rata procurement fee. This was a huge difference from the initial claim of R12 237.

Redfern did respond, stating that they had no comment for the newspaper.

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

 
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