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10 residential rental myths debunked!

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10 residential rental myths debunked!

Over the years, TPN has received many queries regarding the legalities of rentals across South Africa and some interesting myths about rental law! These myths manifest quite mysteriously and continue to create confusion throughout the property industry. In this article, we will debunk the 10 most common residential rental myths and, set the record straight.

1. 7-day grace period
Often TPN receives a query that states that every tenant is entitled to a 7-day grace period when it comes to paying monthly rental. There is no legislation that regulates a 7-day grace period in respect of monthly rental. Regulation 6 of the Rental Housing Act Unfair Practice Regulations states that rental is payable without demand or notice from the landlord or property practitioner and that unless a tenant is otherwise notified in writing, the rental is payable on the first of each month. There is no further provision that obligates the landlord to provide a grace period.

2. The tenant must be given a chance to remedy any property damages caused by themselves
At the termination of the lease agreement, the tenant is obliged to return the property to the same condition that the tenant received, fair wear and tear excluded. This is regulated in terms of Regulation (2)(f) of the Rental Housing Act Unfair Practice Regulations. Accordingly, this means that at the outgoing inspection the tenant must return the property to the landlord in the same condition that the tenant received the property in. Therefore, it can be accepted that all repairs and maintenance to the property must be completed by the outgoing inspection.

However, property practitioners have received complaints from tenants that after the outgoing inspection has been completed and damages have been noted that the tenant is responsible for, that the tenant is entitled to be afforded a chance to repair any and all damages before the landlord performs the repairs himself and deducts the costs from the deposit.

There is no provision in South African legislation that states a tenant must be given an opportunity to repair any damages after the outgoing inspection, the property is to be returned to the landlord with all necessary repairs and maintenance complete at the outgoing inspection.

3. Alternative quotes
When a lease agreement comes to an end the tenant is held responsible for any damages to the property that the tenant is responsible for, for which costs can be recovered from the deposit. In order to repair any damages, the landlord is entitled to appoint a contractor to repair such damages.

Over the years, a belief has settled over tenants that they are entitled to three alternative quotes which is subject to the tenant's approval. Section 5(3)(g) of the Rental Housing Act stipulates that on the expiration of the lease agreement, the landlord may apply the deposit and interest thereon towards the payment of all amounts for which the tenant is liable under the said lease, including the reasonable cost of repairing damage to the property during the lease period.

This particular provision, as well as the entire Rental Housing Act, does not speak to three quotes being obtained before the tenant must approve one quote to proceed with the repairs. The provision speaks to the fact that the cost of repairing the damage to the property must be reasonable. Therefore, an owner would not be able to charge an excessive amount for damages that would not normally cost as much but there is no legislative provision that states three quotes must be obtained before the tenant is entitled to approve one quote.

4. If a party to the lease dies, the lease automatically terminates
Once in a while, we come across the unfortunate incident of either the lessor or the lessee passing away during the lease period. Many property practitioners and landlords believe that upon the death of a party to the lease agreement, the lease agreement will automatically terminate. This is not the case.

The lease agreement remains valid and binding and the executor of the deceased's estate will step into the shoes of that particular party to the lease agreement. For instance, if the tenant passes away during the lease period, the executor of the tenant's estate will step into the shoes of the tenant and the termination of the lease agreement will need to be addressed between the landlord and the executor. Any rental claims or damages claims of the landlord must be submitted through the deceased's estate.
Should the lease agreement make provision that the lease agreement will terminate upon the death of either party, then in such a particular case the lease agreement would automatically terminate.

5. The lease agreement does not exist after expiry
Often property practitioners and landlords explain that the lease agreement has expired and as such, has automatically terminated and there is no lease agreement in place. This is incorrect in law as section 5(5) of the Rental Housing Act states that if on expiration of the lease agreement, the tenant remains in the dwelling with the express or tacit consent of the landlord, the parties are deemed, in the absence of a further written lease, to have entered into a periodic lease, on the same terms and conditions as the expired lease, except that at least one month's written notice must be given of the intention by either party to terminate the lease agreement.

Therefore, a lease agreement that has not been formally renewed, has expired and the tenants remain in the property will automatically continue on a month-to-month basis and either party can cancel the lease with a calendar months' notice to terminate such agreement.

6. Letters of demand - 7 Day or 20 Business Day?
When it comes to sending a letter of demand to your tenant, there is a lot of confusion as to the time period that must be provided to the tenant to remedy their breach. Is it a 7-day letter followed by a 20-business day letter or the 20-business day letter and then the 7 day letter?

There is no requirement in law that requires two letters of demand to be sent in order to cancel a lease agreement. One letter of demand must be sent to the tenant and to determine which period to afford the tenant to remedy their breach, you must determine if the Consumer Protection Act ('CPA') applies to your lease agreement or not. TPN have prepared a diagram to help you determine if section 14 of the CPA will apply to your lease agreement.

Should the CPA not apply to your lease agreement, you are only required to send a 7-day letter of demand and if the demanded amount is not paid within the 7 days, then the lease agreement can be cancelled immediately.

In the event that the CPA does apply to your lease agreement, you are required to send a 20-business day letter of demand and if the demanded amount is not paid within the 20 business days, then the lease agreement can be cancelled immediately.

7. After a lease agreement is cancelled, the tenant must be given 30 days to vacate the property
Once a lease agreement has been cancelled, the tenant is effectively placed in illegal occupation of the property and is expected to vacate the property immediately. This is the correct procedure to follow when cancelling the lease agreement but a lot of the time, the cancellation of the lease agreement is disputed in that the alleged prerequisite time period of 30 days had not been afforded to the tenant to vacate the property.

There is no basis for this notice period in our legal system as no legislation regulates such a period. If the correct letter of demand has been sent (see above to check if the right letter of demand was sent) then the lease agreement may be lawfully cancelled immediately, and the landlord is not obliged to provide a further time period to vacate the property. It is the landlord's discretion to provide the tenant a further time period to vacate the property but there is no legislative obligation on the landlord to do so.

8. A one-page lease agreement is sufficient
Whilst a lot of people believe that a one-page lease agreement is sufficient and easy as there is only one page to read and sign, a one-page lease agreement will never sufficiently protect yourself as the landlord and the property practitioner.

A lease agreement needs to be comprehensive enough to accurately reflect the provisions of the relevant laws in South Africa and must include necessary provisions to protect the landlord or the property practitioner against liability and loss. This is why TPN offers comprehensive yet simple-to-understand lease agreements for any type of rental that sufficiently protects the interests of the landlord and the property practitioner whilst protecting the rights of the tenant.

9. The ability to utilise the deposit as your last month's rental
Many tenants believe that during their lease period, the deposit may be used for the last month's rental and refuse to pay the last month's rent. This is factually incorrect as the Rental Housing Act stipulates that the deposit is to be used for the reasonable costs of repairing any damage to the dwelling.
Should there be additional deposit funds remaining, then the remainder can be allocated towards any amounts that the tenant is liable for in terms of the lease agreement, if any. If the deposit has already been used for the last month's rental, then there are no funds that can be recovered instantly for any property damages that the tenant is liable for.

The TPN Lease Agreement clearly sets out that the deposit may not be used as the last month's rental and places the tenant in breach of the lease agreement should they request the deposit to be used as the last month's rental. 

10. Interest vs late fee penalty
Many landlords and property practitioners request that in addition to the interest charged on arrear rental, a late payment fee can be charged to the tenant. However, in terms of Regulation 3(3)(a) of the Rental Housing Act Unfair Practice Regulations, a lease agreement must not include any provision which imposes a penalty for late payment of rent whether or not the penalty takes the form of administrative charge or any other form other than interest. In terms of this provision, a tenant may only be charged interest on arrear rental and cannot be charged a late payment fee of any kind at all.

Author TPN Credit Bureau
Published 05 Oct 2023 / Views -

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