Termination of Lease Agreements

Lease agreements that are concluded in the ordinary course of the business of the landlord falls within the scope of the Consumer Protection Act 68 of 2008 (“CPA”) which provisions will override any provisions to the contrary contained in the lease agreement.

Lease agreements that are incidental (e.g., not an investment property) and are not concluded in the ordinary course of the business of the landlord does not fall within the ambit of the CPA and the provisions of the lease agreement itself must be followed when terminating a lease. The responsibility would however be on the landlord to establish that the lease falls outside the scope of the CPA in that the landlord does not rent the property out in the ‘ordinary course’ of his business.

In terms of the Consumer Protection Act 68 of 2008 (“CPA”), a tenant can be regarded as a ‘consumer’ with certain rights pertaining to such lease which can lead to an early termination of the lease agreement by the tenant. Lease agreements are regarded as fixed term contracts enabling a tenant (the ‘consumer’) to cancel a lease by giving 20 business days written notice to do so (Sec 14 of the CPA) regardless of the duration of the actual lease.

Over and above this, should a tenant default, the landlord cannot as a matter of course rely on the notice period stipulated in the lease agreement to terminate, as the notice must also comply with the provisions of the CPA which could necessitate a notice period in excess of the time period stipulated in the lease agreement.

The question that most landlords have is: “How do I cancel my lease agreement in the event of a default, and does the CPA apply?”.

The landlord would have to follow the following procedures:

1. Breach Clause

In most lease agreements the agreement contains a clause for breach of contract. This clause will stipulate that if the tenant is in breach of contract the landlord has to afford the tenant 7 days written notice (or any time period as stipulated in the agreement) to remedy such breach.

Should the tenant fail to remedy the breach most lease agreements then affords the landlord the right to immediately cancel the lease agreement.

2. Application of the CPA

If the Lease Agreement is regulated in terms of the CPA the Landlord may only cancel the agreement after giving the tenant 20 business days’ notice and stating in such notice that should he fail to remedy such breach the agreement shall be cancelled. Should the tenant fail to remedy such breach the Landlord would need to do another written letter (cancellation letter), wherein he notifies the tenant that he is cancelling the lease.

It is therefore very important for landlords to take note of the CPA and the procedures that need to be followed to evict a non-paying tenant.