A tenant wants to break their lease agreement early due to a job relocation, but the landlord insists on enforcing the full term of the lease. The tenant is seeking advice and wants to know what their rights are under South African law if they need to terminate a lease early due to a job relocation, and what penalties might apply?
Abrahams & Gross Candidate Attorney Stephne Fincham and Litigation and Dispute Resolution Attorney Henno Bothma respond:
In South Africa, tenants have certain rights and obligations when it comes to the early termination of a lease. These rights and potential penalties are governed by the Consumer Protection Act (CPA) 68 of 2008 and the Rental Housing Act 50 of 1999.
Rights to Early Termination under the CPA:
Section 14 of the CPA provides tenants with the right to terminate a fixed-term lease prematurely by giving 20 business days written notice. This applies even if the lease agreement itself does not provide for early termination. The tenant will however remain liable for any amounts owed to the landlord in terms of the lease agreement up to the date of cancellation.
A distinction must be drawn between tenants who are natural persons and those who are juristic persons. Section 14 does not apply to transactions between juristic persons.
Penalties for Early Termination:
While the CPA allows for early termination, the landlord is entitled to charge a "reasonable penalty" for the early cancellation. The amount is not fixed and can vary depending on several factors, including:
- The remaining period of the lease.
- The effort required to find a new tenant.
- The loss of rental income during the period it takes to find a replacement tenant.
- Any other reasonable costs the landlord incurs due to the early termination.
In some cases, the landlord might use the tenant's security deposit to cover the reasonable penalty or any unpaid rent.
Reasonableness of Penalty:
The concept of "reasonable penalty" is not strictly defined and can sometimes be a point of dispute between tenants and landlords. If the penalty seems excessive, tenants have the right to challenge it. The Rental Housing Tribunal or Court can be approached for mediation if there’s a disagreement.
Special Considerations for Job Relocation:
Job relocation in and of itself is not a valid reason for early termination, unless specifically provided for in the lease agreement.
Potential Negotiations:
Tenants can try to negotiate with the landlord to either reduce the penalty or find a suitable replacement tenant to mitigate costs. Good communication and a mutual understanding can sometimes lead to a more favourable outcome.
Dispute Resolution:
If there’s a dispute over the penalty or any other issue arising from the early termination, tenants can approach the Rental Housing Tribunal or Court for resolution.
In summary, while South African law does provide tenants, who are natural persons, with the right to terminate a lease early due to job relocation or otherwise, it also allows landlords to impose a reasonable penalty for such early termination.
Tenants should review their lease agreements, communicate with their landlords, and seek legal advice or mediation if necessary to ensure a fair resolution. If mediation fails, either party can seek legal recourse through the appropriate channels, such as the Rental Housing Tribunal or the Courts. It is important for both landlords and tenants to seek legal advice and understand their rights and obligations before pursuing legal action.
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