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Early Lease Cancellation: What You Need To Know

Early Lease Cancellation: What You Need To Know

The world of rental real estate has always been a hot topic. With the recent news of the Rental
Housing Amendment Act, possibly coming into effect – landlords and tenants will have to re-
educate themselves on their prospective rights.

With these developments in rental and lease compliance on the verge of taking effect, we
thought it would be the ideal time to discuss a common dilemma many tenants and landlords

What happens if a lease agreement is cancelled early?

In South Africa, the Consumer Protection Act (CPA) plays a big part in all business dealings, to
guard consumers against unfair business practices. But when it comes to property, there is still
some confusion regarding this act.

The CPA stipulates that as a tenant, you have the right to cancel your lease at any time,
provided that you give a minimum of 20 business days notice to your landlord. However, this
does not mean that a tenant can end a lease without possible penalties.

A tenant may be liable for a cancellation fee, advertising costs and other financial repercussions
if the landlord is unable to obtain a new tenant in the short term; although this does not give the
landlord permission to withhold the deposit or forcefully demand the remainder of the lease or
excessive cancellation fees.

Section 14 of the CPA states that early termination of a lease is allowed but that a small
cancellation fee could apply, usually for the amount of one month’s rental. It is, however, crucial
to remember that a landlord may not withhold a deposit as a substitute for the cancellation fee.
A deposit may only be used to repair damages to the property and landlords are not permitted
to estimate these amounts. The tenant must also be provided with receipts to prove repair
amounts, with the balance of the deposit, returned to the tenant.

If a landlord does not comply with the CPA, in regards to an early cancellation or if they have
demanded unfair compensation, a tenant may take legal action by contacting the National Consumer Tribunal or Rental Housing Tribunal.

As a tenant, remember to always read your lease agreement carefully before signing – taking special note of early cancellation clauses.

For this and more property law advice contact the team at AMC Hunter Inc.

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