Chapter 15

Question 1

Define a contract of lease.

Answer 1

It is an agreement between a lessor and a lessee in terms of which the lesser agrees to give the lessee the undisturbed temporary use and enjoyment of part or all of the property, and in return the leasee, agrees to pay rental.

Question 2

Is a verbal contract of lease valid and binding?

Answer 2

Yes, unless the parties agree that the contract will only be binding when written.

Question 3

Does the lessor have to be the owner of the property?

Answer 3

The lessor does not necessarily have to be the owner of the property. For example, a lessee (who does not own the property) can sub-lease.

Question 4

What is the valid duration of a lease? What is the maximum duration of a lease?

Answer 4

A lease cannot be permanent, the parties do not have to specify a fixed period. The following are also valid lease:
• a lease that runs until a certain event occurs at an unknown time in the future.
• a lease that lasts while the lessor or the lessee wishes it.
• a lease where, the length or duration is not set.

A lease cannot last longer than 99 years.

Question 5

Define rent.

Answer 5

Rental is the lessee’s payment to the letter for the use of the leased property.

Question 6

Define bracketed rent.

Answer 6

A bracketed rent is where the rent is payable as a range rather than a fixed amount.

Question 7

What are the different types of leases and how are they classified?

Answer 7

Leases are classified into different types according to the duration of the lease period:
• fixed term leases
• tenancy at will
• periodic leases
• hybrid leases

Question 8

Define fixed term lease.

Answer 8

Where the agreement states the length of the lease expressly or implication, the lease comes to an end at the end of the agreed period

Question 9

Define tenancy at will.

Answer 9

The duration of the lease is not fixed, but the parties agree that the lease will last for as long as both of them want it to carry on.

Question 10

Define a periodic lease.

Answer 10

A periodic lease has no fixed duration, but the parties intend it to last through a series of a great period without saying when it will end.

Question 11

Define a hybrid lease.

Answer 11

A hybrid lease is a mixture of a fixed term and periodic lease. Lease is for a fixed period but gives either party the choice to end the lease before the fixed time is over by giving the required notice.

Question 12

Is it true that death terminates a contract of lease?

Answer 12

Death does not usually end a lease. Only in the case of tenancy at will, the lease ends when one party dies.

Question 13

What happens to the contract of lease when the lessee becomes insolvent?

Answer 13

The trustee has to decide whether the lease will continue or not, if the trustee does not make a decision in three months the lease cancels automatically.

Question 14

What happens when the lessor becomes insolvent?

Answer 14

The lease may end and they may lose the right over the property. The trustee decides whether to carry on with the lease or not.

Question 15

How does the lease before sale protect the lessee?

Answer 15

It protects the lessee from eviction, if the leased property is sold. The new owner is merely substituted for the original lessor and the original lessor is no longer a party to the lease agreement at all.

Question 16

What is the difference between a long-term and a short-term lease?

Answer 16

A long time this is for a period longer than 10 years and a short term lease is for less than 10 years

Question 17

How is a long-term lease protected in law?

Answer 17

Long-term lessee is protected against the creditors and heirs of the lessor:
• if the lease is registered against the title deed of the leased property.
• who knew of the lease when the rights were created.
• for a maximum of 10 years.

Question 18

How are short-term leases protected in law?

Answer 18

If the lessee is occupying the leased property, he is protected against anyone for the full period of the lease. If there is no such occupation, a short-term lease is effectively only against the heirs and the buyer who knew of the lease.

Question 19

What are the three types of improvements made to a property?

Answer 19

Necessary improvements - required to protect and preserve the property.
Useful improvements – beneficial to the property and increase its value.
Luxurious improvements – purely for decoration.

Question 20

Can the lessee claim compensation for improvements, even if done without the lessor’s knowledge and consent?

Answer 20

The lessee can claim compensation for useful and beneficial improvements, even if done without the lessor’s consent, but not for luxurious improvements, at all.

Question 21

What are the 5 duties of the lessor?

Answer 21

The lessor has five duties:
• To deliver the property to the lessee
• To maintain the property during the lease
• Not to disturb the enjoyment and use of the lessee
• To warrant against eviction of the lessee
• Pay the rates in taxes for the leased property

Question 22

What are the remedies available to the lessee if a lesoor fails to deliver the property to the lessee?
Explain each remedy

Answer 22

The lessee has six remedies available to him:

1) Request specific performance - the court may order the lessor to deliver the property as agreed.

2) Refuse delivery - if the property is delivered in an unfit condition, the lessee can refuse to accept the delivery until the condition is fixed.

3) Repair the problem and charge the lessor - A lessee can arrange for necessary repairs to be done and then deduct the cost from the rent that is payable.

4) Claim damages for any loss caused by the breach.

5) Claim reduction in rent - A lessee can claim reduction even if the problem is not the lessor’s fault.

6) Cancel the lease - only allowed if there is a cancellation clause or a major breach or where a defect totally prevented the use of a leased property.

Question 23

When will the lessor be in breach of contract in terms of not maintaining the property during the lease and what are the remedies available to the lessee?

Answer 23

The lessor will be in breach of contract if he was informed of the problem with the leased property and did not get it repaired in a reasonable time. The remedies available to the lessee are the same as for a breach of duty to deliver.

Question 24

Explain the lessor’s duty not to disturb the lessee’s use and enjoyment.

Answer 24

The lessor may enter the property only when allowed to do so in terms of the lease agreement.

The lessor can only take away the lessee’s use and enjoyment of the property lawfully.

The lessor cannot evict the lessee when repairing or improving the leased property.

Question 25

What are the remedies available to a lessee when the lessor interferes with their enjoyment of the property?

Answer 25

The following remedies are available:

An interdict - is a court order that orders a party to stop any unlawful interference.

A spoilation order - is a court order to return the possession of a property to someone who was in peaceful possession and whose possession was taken without permission.

Cancellation

Damages or rental reduction

Question 26

Explain the lessor’s duty to warrant against eviction of the lessee.

Answer 26

The warranty only applies where a third-party has a valid right and they disturb the lessee’s use and enjoyment of the property. The warranty does not apply if the lessee was aware that a third-party has a valid right.

Question 27

What are the remedies available to a lessee in the case of disturbance by third party?

Answer 27

The remedies available are:

Cancellation, if the disturbance is a major negative effect on the use and enjoyment of the property

Claim damages for the loss suffered due to the disturbance.

Rental reduction according to how much the interference has lessened their use of the property

Question 28

What are the 4 duties of a lessee, aka residual duties?

Answer 28

The lessee’s duty (lessor’s rights) are the following:
• To pay rent
• To take reasonable care of the leased property
• Not to make major changes to the leased property without the lessor’s permission.
• To return the property in the same condition.

Question 29

What happens when the date of rental payment is not fixed?

Answer 29

In that case, the rental is only due after the lease period is over.
However, if the agreement states that the rental must be paid in advance, it must be paid on or before the first day of the lease period.

Question 30

What are the remedies available to the lessor if the lessee fails to pay rent?

Answer 30

Following other remedies available to the lessor:

1) Claim the rental owing.

2) Claim damages - if the rent is late, the lessor can claim interest; if the lessee breaks the lease without notice, the lessor can claim for lost rent until the new lessee starts paying.

3) Cancel the lease.

Question 31

Explain the lessor’s hypothec for rent.

Answer 31

If the lessee owes rent to the lesser, the lesser can take steps to hold onto any property of the lessee that is on the leased premises until the rent is paid. The lessor’s right to hold onto the lease’s property is the lessor’s hypothec for rent.

Question 32

What are the remedies available to the lessor if the lessee does not care for the property properly or makes major changes without permission?

Answer 32

The lessor:
• May get an indict for a threatened or continuing breach.
• May apply for an order of specific performance
• May claim damages for the loss that they have suffered as a result of the lessee’s failure to care properly for the property
• May cancel the lease for repudiation or for a major breach by the lessee.

Question 33

What are the legal remedies available to the lessor if the lessee fails to return the leased property on time and in its proper condition?

Answer 33

The available remedies are:

Ejectment - it is a court order for the removal of the lessee.

Claim damages - the rent lost due to the lessee holding over.

An order of specific performance for lessee to fix the property.

Question 34

What are some legislation that are applicable to leases?

Answer 34

• The parties to the lease should keep each other’s personal information protected.
• A lease of land does not have to be in writing for it to be valid.