Part 1: Lawfully Cancelling an Agreement of Lease

Confusion often reigns in circumstances where Landlords want a tenant to vacate a leased premises. This series of articles will delve into the practicalities of the steps to lawfully evict a tenant.

The legal cancellation or termination of rental agreements is not as easy as it may seem. Parties to the agreement should make sure that their agreements are clear in this regard, and that it complies with the Consumer Protection Act (CPA) where applicable. It is always a good idea to seek expert legal advice before an agreement is terminated or cancelled.

BREACH

It is important to make a distinction between "termination" and "cancellation" as different principles apply to each of these terminologies: –

"Termination" refers to when the fixed term of the agreement comes to an end or expires, for example, the lease agreement states the agreement will come to an end on a specific date, should the parties not be willing to renew the agreement.

"Cancellation" is where one of the parties want to cancel the agreement prematurely, i.e., before the termination date of the agreement and as a result of breach by the tenant.

A Landlord may only cancel an agreement should the Tenant have materially breached the terms of the Agreement. The most common form of breach by a Tenant is the failure to make payment of rent and other amounts due in terms of the agreement.

Practically, a landlord would by written notice to the tenant note the specific form of breach and provide the Tenant with a set number of days to remedy or "make good" the breach in reference to the specific terms of the agreement or other legislation. Should the Tenant fail to remedy or "make good" such breach, that Landlord may decide to cancel the agreement.

CONSUMER PROTECTION ACT

A crucial question that needs to be answered before taking any steps to place a tenant in breach is whether the Consumer Protections Act (CPA) applies to the agreement of lease.

The CPA will firstly only be applicable on lease agreements if they are concluded for a fixed term only (for example for 12 or 24 months).

Section 14 of the CPA, which deals with the cancellation of fixed term agreements, secondly compels a Landlord to provide at least 20 business days' notice of breach before cancellation may be affected.

It is important to note the specific exception in the wording of Section 14(1): "this section does not apply to transactions between juristic persons regardless of their annual turnover or asset value".

The implication of the aforesaid exception is that where two Private Companies have entered into a fixed terms agreement of lease, the Landlord need not provide at least 20 days' notice of cancellation but may follow the specific terms of the agreement regulating the cancellation of the agreement or otherwise provide reasonable notice of the breach.

NOTICE OF CANCELLATION

Upon cancellation of the agreement of lease, a Landlord is entitled to immediately proceed with the legal process to lawfully evict the unlawful occupant of the leased premises.

It is commonly believed that Landlords, especially residential Landlords, need to provide 30 days' notice to the Tenant to vacate the leased premises. This is incorrect. Upon cancellation of the agreement of lease, the tenant's right to occupy the leased premises is cancelled and the Tenant has no legal right to remain in the premises any further.

Only after the Notice of Breach is sent to the breaching tenant, and the period afforded to the tenant to remedy such breach lapses does the Landlord obtain the right to cancel the agreement. This is usually done by providing a second Notice which records the Cancellation and requires the Tenant to vacate from the leased premises forthwith.

CONCLUSION

It is of paramount importance for a landlord to obtain legal advice throughout the process of cancelling an agreement of lease. The implication should a Landlord not lawfully cancel an agreement of lease, is that the agreement remains in force and the Tenant, notwithstanding a Notice of Cancellation being delivered, shall have a legal right to occupy the leased premises. Initiating legal process to evict a tenant would under such circumstances, be materially defective and lead to a waste of legal costs.

This guide is authored by the Commercial Industrial & Residential Property Law group at Barnard Incorporated Attorneys.

Johan du Toit | Senior Associate
Wilco du Toit | Associate

The Barnard Inc property law team understands the delicate relationship between Landlord and Tenant, and always seeks to provide actionable solutions that are based on preserving and optimising client interests.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.