Letting/Hiring Part 1

Question 0

What are the sources of SA law of lease?

Answer 0

1) Common Law from case law.

2) Legislation:- Rental Housing Act (as amended) + CPA.

Question 1

Definition of contract of lease?

Answer 1

A RECIPROCAL AGREEMENT, in terms of which:

• One party (LESSOR/LANDLORD) transfers USE & ENJOYMENT of a thing;
• To another party (LESSEE/TENANT), TEMPORARILY;
• Against payment by Lessee of RENT.

Question 2

Requirements for valid contract of lease?

Answer 2

General Reqs.
1) Consensus; 2) Contractual Capacity; 3) Possibility; 4) Legality
&
5) Formalities
- RHA: Need not in writing, BUT s5(2) lessee has right to ask to be in writing.

• CPA s50: certain lease contracts must be in writing.
• NCA: contract of lease iro movables in writing if fall within purview of NCA.

Question 3

What are the Essentialia of a contract of lease?

Answer 3

Consensus (Agreement) on:

1) Leased Property;
2) Temporary use and enjoyment;
3) Nature and extent of Counter-performance. (Rent)

+ RHA
+ CPA

Question 4

Essentialia of lease contract:

In terms of the lease agreement, how is consensus reached in terms of the “Leased Property”

Answer 4

Leased Property:

1) Movable/Immovable;
2) Rural/ Urban tenements (purpose not location);
3) Corporeal/ Incorporeal;
4) Commercially available;
5) Possible to lease part of property (eg. Room in house);
6) Must be identified or at least identifiable.
(If not, contract= VOID FOR VAGUENESS.)

Question 5

Essentialia of lease contract:

How is consensus reached in terms of the temporary conferment of use and enjoyment of leased property to lessee?

Answer 5

The parties must agree:

1) Use & enjoyment is only TEMPORARY (permanent= contract of sale);
2) No entitlements to consume or destroy;
3) Substance over form. (Length of lease)

Question 6

Essentialia of lease contract:

How is consensus reached with regards to the nature and extent of counter-performance?

Answer 6

1) The parties must agree that the temporary use and enjoyment of the leased property is exchanged for a COUNTER-PERFORMANCE by the lessee.

2) Uncertainty about whether CP must be in money:
- Rural tenement where CP form of produce= Partrarian Agricultural Lease) [Du Preez case)
- Zulu case= CP must be money.

3) Determined or Determinable (if not= Invalid):
- Fixed Rent (most common)/ formula;
- Rent determined by specific 3rd party.

Question 7

What are the Common Law duties of the Lessor/Landlord?

Answer 7

1) Delivery of temporary Use & Enjoyment of leased property;
2) Maintenance of leased property;
3) “Undisturbed” use & enjoyment;
4) Compensation for improvements to leased property.

Question 8

Duties of Landlord:

How must delivery of use and enjoyment of the Leased property take place?

Answer 8

1) Actual or Symbolic delivery (keys to house);
2) Must be delivered in condition agreed upon/ condition at time of conclusion of contract.
3) If leased for specific purpose: all accessories required for proper use of intended purpose. (Eg. Keys to rental car)

Question 9

Duties of Landlord:

What does the duty of maintenance of the leased property entail?

Answer 9

The landlord must maintain the leased property:

1) To ensure property remains suitable for purpose for which it was leased.
- Parties can agree that Lessee maintain/ share maintenance duties.

2) Damage caused by lessee/ person whom lessee responsible excluded from duty;

Failure to comply with duty-
Remedies of Lessee?
- Normal remedies for breach of contract;
- Reduction of rent;
- Lessee can undertake repairs and claim cost from Lessor (must give lessor reasonable opportunity to maintain/ repair himself.)

Question 10

Duties of the Landlord:

What does the duty of Undisturbed use and enjoyment entail?

Answer 10

It is not required that landlord is owner of the property, BUT: must guarantee lessee Undisturbed use and enjoyment of property.

The landlord must guarantee that there will be no disturbance of the right to use and enjoyment by:
1) The landlord HIMSELF;
OR
2) A 3rd Party with a better title.

If landlord disturbs lessee?
- ordinary remedies for breach of contract (specific performance; rescission and/or damages)
Specific performance= take form of Prohibitive Interdict or Spoilation order.

Question 11

Duties of landlord:

What is a lawful disturbance by a landlord?

Answer 11

1) Reasonable inspection of the leased property;

2) Maintenance of property.

Question 12

Undisturbed use and enjoyment:

What are the duties of a lessee in the case of a disturbance by a 3rd party?

Answer 12

1) Inform Lessor of disturbance;
2) Put up virile/ vigorous defence (if lessor fails to act);
3) Claim damages from lessor (not specific performance);

*Disturbance by 3rd party with lesser title- Not covered by landlords duty.

Question 13

What does the Huur Gaat Voor Koop rule entail?

Answer 13

Huur Gaat Voor Koop means that the lease takes precedence over sale.

• Leased immovable property, when ALIENATED, remains subject to the lease (RD law)
• Accords lessee REAL RIGHT, which can enforced against the whole world.
• New owner becomes Lessor.

Question 14

Huur Gaat Voor Koop:

When will a lessee of a short term lease be protected by the Huur Gaat Voor Koop rule?

Answer 14

If the lessee is in OCCUPATION of the property.

Question 15

Huur Gaat Voor Koop:

When will the lessee of a long-term lease be protected by the Huur Gaat Voor Koop rule?

Answer 15

A lessee will be protected in terms of a long term lease (10+ years) for the duration of the lease if the lease has been registered in Deeds Office.

• If deed not registered?
  Lessee protected for first 10 years (provided in OCCUPATION of property)

Question 16

Huur Gaat Voor Koop:

What happens where the lessee of a long-term lease has neither registered the lease nor occupying the property?

Answer 16

The lease is still binding on:

1) Persons who acquire the land without counter-performance (eg. Heirs);
2) A new owner who was AWARE OF LEASE at the time at which he became owner;
3) A new owner who succeeds lessor in rights as well as obligations.

Question 17

Huur Gaat Voor Koop:

Does the lessee have a right of election as to accept the purchaser of the land as the new Landlord?

Answer 17

Genna-Wae Properties v Media-tronics:

HELD: the lessee has no right of election as to whether or not to accept the purchaser of the leased property as the new landlord.

Question 18

Huur Gaat Voor Koop:

Is the purchaser of the leased property bound to the additional, incidental obligations contained in a lease?

Answer 18

Spearhead Property Holdings v E&A Motors:

HELD: clauses in the lease contract which are purely incidental to the lease (as opposed to those which are CENTRAL to the lease) remain valid only against the original lessor (NOT the new owner).

• In casu court held that an Option (contract) to purchase the leased property, granted to the lessee= INCIDENTAL to lease.
• Dealt with as a case of “DOUBLE SALES”.

Question 19

Duties of the Lessor:

What does the duty of compensation for improvements entail?

Answer 19

Where permission obtained from lessor?
- Compensation may have been agreed to.

Where no compensation agree on? (Unjustified enrichment)

• Necessary Improvements= all expenses claimable
• Useful improvements= increase in market value or costs incurred.

Question 20

Compensation for improvements:

Effected without permission of lessor?

Answer 20

May be removed by lessee during lease period/ termination of lease (provided no damage caused).

• Lessee will never have a lien over property as a result of improvements.

Question 21

What are the duties of the Lessor/Tenant?

Answer 21

1) Payment of rent;
2) Proper use of leased property;
3) Return of leased property on termination of lease.

Question 22

Duties of tenant:

What does the duty to pay rent entail?

Answer 22

This is the most NB duty of the tenant.
- Payment done in manner agreed upon in contract.
(No agreement- at end of lease term)

Question 23

Tenant’s duty to pay rent:

What remedies are available to the landlord where a tenant fails to pay rent?

Answer 23

1) Specific performance, Cancellation and/or damages (mora debitoris/ repudiation)
2) Landlord’s Tacit Hypothec.

Question 24

Tenant’s duty to pay rent:

What does the landlords tacit hypothec entail!

Answer 24

The hypothec comes into operation at the moment the tenant falls into ARREARS with rental payments.
The aim of the hypothec is to give the landlord security to ensure payment.

• The tenant’s movable assets on the leased property are subject to the hypothec. (INVECTA ET ILLATA) (incl. fruits and crops)
• The hypothec exists only for the period which rent remains I. Arrears.
• Exists only while assets are on leased property.

Question 25

Landlord’s tacit hypothec:

When will movables belonging to a 3rd party be subject to the hypothec?

Answer 25

Subject to hypothec only:

• Where tenants INVECTA et ILLATA insufficient to cover arrears rent; AND
  1) Landlord unaware movable belong to 3rd party;
  2) 3rd party aware that impression created that tenant owns movables;
  3) Movable on leased property with some degree of permanence;
  4) Movables on leased property for use by tenant.

Question 26

Duties of tenant:

What does the duty of proper use of leased property entail?

Answer 26

1) Tenant must act as bonus paterfamilias,
2) Must not cause damage to property;
3) Must use property for intended purpose (eg. residence not business);
4) Must not make permanent alterations to property.

Question 27

Duty of tenant:

What remedies are available to the landlord where the tenant doesn’t make proper use of leased premises?

Answer 27

1) Specific performance (prohibitive ineterdict);
2) Cancellation (lex Commissoria or breach sufficiently material); and/or
3) Damages.

Question 28

Duties of tenant:

What does the duty to return the leased property entail?

Answer 28

The tenant must return the property:

1) Upon termination/expiration of lease;
2) In condition which it was received (fair wear and tear accepted);

Where tenant fails to return in required condition?
- SP/ Damages

Where fails to return property at all?
- limited by s26(3) constitution.

Question 29

When may a tenant sub-lease the leased property?

Answer 29

Urban tenement
- may be sub-leased without permission, UNLESS: contract provides otherwise

Rural Tenement
- Written consent required.

Question 30

What happens where a tenant sub-lets leased premises against a prohibition on sub-lease?

Answer 30

It will be seen as a breach of contract (positive malperformance)
- The landlord may cancel contract= SUBSTANTIAL BREACH.