Page 20 - Robin Twaddle PTG 2017 Digital

◆◆ The question arises as to what is meant by “the landlord being in the business of letting
properties” – one view is that it includes the individual property owner who earns rental
income from a property irrespective of what he or she does for a living. Another view is
that the landlord must be a serial property renter before (s)he falls within the ambit of the
Act. There are still many ambiguities and uncertainties surrounding some of the provisions
of the Act which only time (and the courts) will be able to interpret and clarify.

Some sections in the Act which will apply to lease agreements:
◆◆ Sections 22 and 40 of the Act state that it is the inherent duty of the landlord to

ensure the tenant understands the lease agreement, and to provide full disclosure and
information.
◆◆ The tenant is entitled to information in plain and understandable language.
◆◆ Most lease agreements are for a fixed period. Section 14 provides that the tenant may
arbitrarily terminate the lease by providing twenty working days written notice to the
landlord (for a lease entered into after 1 April 2011).
◆◆ Where the CPA applies, a landlord can only terminate the lease if there was a material
breach and the tenant has not remedied the same within the specified period provided
for in the lease agreement.
◆◆ Upon cancellation by the tenant, the landlord may impose a reasonable cancellation
penalty.
◆◆ Section 14 however does not apply to transactions between juristic persons, regardless
of their annual turnover or asset value.
◆◆ Fixed lease agreements under the Act have a maximum duration of twenty-four months.
After expiry of the agreement, it will continue on a month to month basis unless a new
agreement is signed. Should the landlord wish to terminate the agreement upon its
expiry, (s)he must notify the tenant in writing not more than eighty but not less than forty
business days (before expiration of the agreement) of its looming expiry. If the agreement
is to be renewed, a notice of any material changes that would apply would need to be
provided to the tenant by the landlord within the same time frame.
◆◆ In summary, if two individuals enter into a lease agreement (commercial or residential),
the CPA will apply, including Section 14. If an individual as landlord and a juristic person
with assets or turnover of less than R2million, as tenant, enter into a lease agreement,
the CPA will apply, including Section 14. However, if two juristic persons, regardless of
assets or turnover value, enter into a lease agreement, Section 14 of the Act will not
apply (the remaining provisions of the Act may apply where both parties are juristic
persons and the tenant as juristic person has assets or turnover value of less than R2
million). Note that where the tenant as juristic person has assets or turnover over R2
million, the CPA will not apply to the lease agreement at all.

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