CHAPTER 18:

Contract of Lease and Occupancy

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 CONTENT

1. DEFINITION
2. ESSENTIAL ELEMENTS
3. FORMALITIES
4. COMMON LAW DUTIES OF THE LANDLORD
5. COMMON LAW DUTIES OF THE TENANT
6. REMEDIES
7. SUBLETTING
8. TERMINATION

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DEFINITION

In terms of the contract:

LETTING BY
LANDLORD • Landlord grants
(LESSOR) temporary use and
occupation of the
property to the tenant
• For a specified period
OF A of time
HIRING BY
SPECIFIED
A TENANT • In return for a specific
IMMOVABLE
(LESSEE)
PROPERTY
sum of money (called
“rent”)

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Definition
A lease is a contract between two persons, the landlord (lessor) and the tenant (or
lessor), for the letting by the landlord and the hiring by the tenant, of specified
immovable property, in terms of which the landlord grant temporary use and
occupation of the property to the tenant for a period of time in return for a
specified sum of money (or share in the proceeds or fruits of the property) called
rent.

In a contract of lease the landlord grant the temporary use of the property,
whereas in the contract of sale, the seller transfer every right (including the right
to use and destroy) in the thing, even the right of ownership

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ESSENTIAL ELEMENTS

1. Specified immovable property

2. Duration of the lease
3. Specified rent

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ESSENTIAL ELEMENTS (cont)

1. SPECIFIED IMMOVABLE PROPERTY

• Parties must be in agreement (consensus) as to the particular subject matter

• If subject matter is NOT identifiable then the contract will be VOID
• Movable are situated in the property they are not automatically included
• The landlord need not be the owner, e.g. Estate agent
• It is sufficient if the landlord is able to give use and enjoyment of the
property.

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 ESSENTIAL ELEMENTS (cont)

2. DURATION OF THE LEASE

• Parties do not intend for the tenant to have use of the property PERMANENTLY! But only for a fixed
period of time.
• Term or period can be fixed either explicitly or implied
• The period can be indefinite, if left to the parties to terminate notice.

• A lease may continue under Common law as follows:

a) Definite period of time
b) Until a certain event occurs
c) From period to period
d) Terminated at will of landlord
e) Terminated at will of tenant 7
 ESSENTIAL ELEMENTS (cont)

2. Duration of the lease (cont.)

• A lease may be renewed expressly or tacitly:

a) Express renewal
o Also known as “Conventional relocation”
o Original lease may contain an option to renew lease during its currency
o Tenant may renew on the expiry of the original lease
o To renew the tenant must comply strictly with the option clause.

b) Tacit renewal
o Also known as “Tacit relocation”
o Landlord allows the tenant to stay in occupation after termination of the lease and continues to
take rent for the use and enjoyment of the property.
o There will be no tacit relocation if either party lacks capacity.

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 ESSENTIAL ELEMENTS (cont)

3. SPECIFIED RENT

• The tenant must pay rent in money; or share in the fruits of the property.
• If rent consist of a certain quantity of fruits or produce, then the tenant is
called colonus partiatius or bywoner
• If thee is NO money is that is payable – agreement is one of loan for use.
• Occupation in exchange for labour is not a lease.
• Definite rent that can be calculated MUST be agreed upon – otherwise there is
NO lease!

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 FORMALITIES

• Under Common law, no formalities are required for an ordinary lease.

• The lease need not be in writing, although written leases are easier to prove.
• BUT if tenant requires a written lease, the landlord must oblige, otherwise it is
an offence that may make the landlord liable for a criminal conviction of up to 2
years imprisonment or a fine.
• With regard to long-term leases (period longer than 10years) does not have to
be registered to be valid between parties. However, registration is required if the
lease is to be enforceable against third parties such as a purchaser.

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COMMON LAW DUTIES OF THE PARTIES

LANDLORD TENANT

1. Delivery of the use and occupation of the 1. To pay the rent

leased property at the time agreed upon

2. To maintain the property 2. To return the property undamaged at the end

of the lease

3. To protect the tenant against interference in 3. To ensure that the property is not misused
the use of the property and is used only for the purpose for which it
was let

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 COMMON LAW DUTIES OF THE LANDLORD
DUTY
1. Delivery of the use and occupation
of the leased property at the time
agreed upon
2. To maintain the property
3. To protect the tenant against
interference in the use of the
property
DESCRIPTION REMEDY
Property must be delivered in a • Specific performance, and
reasonable state of repair • Damages
Must repair all flaws that interfere with • Cancel
the tenant’s use of the property • Damages
• Demand reduction in the rent
proportionate to the loss of use
Lease creates an implied warranty that • Damages
tenant will not be disturb in the
possession of the property during the
lease period. Landlord may enter
property to attend to repairs or to
inspect property
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 COMMON LAW DUTIES OF THE TENANT

TENANT DESCRIPTION REMEDY

1. To pay the rent Must be paid in money, otherwise there • Specific performance, or
must be an explicit agreement to share • Cancel
in the fruit of the property.
Must be paid on time as per the
agreement.
Common law position? Tenant might be
in arrears with rent for 2 years
Common law position changed by the
case of Goldberg v Buytenbach
Boerdery Beleggings, 1980

2. To return the property undamaged at Must exercise the degree of care that a • Damages
the end of the lease reasonable person would observe in
using his/her own property
A tenant failing to return the property is
said to be “holding over” and may be
evicted without court order

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 COMMON LAW DUTIES OF THE TENANT (cont)

TENANT DESCRIPTION REMEDY

3. To ensure that the property is not misused and Property may only be used for • Damages
is used only for the purpose for which it was the same purpose as it was use
let before the lease

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 REMEDIES

Ordinary remedies for breach of contract applies. Check chapter 15.

If the breach of contract is material, the aggrieved party has the choice either to

• Stand by the lease,

• Sue for specific performance, and
• Claim any damages suffered

or to
• Cancel the lease, and
• Sue for damages.

If the breach is not material, the aggrieved party may only claim for damages.

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 REMEDIES (cont) Tenant

Remedies for the tenant:

Under the common law the tenant has remedies available in 5 different situations:
1. Landlord breaches the duty to deliver
 Material breach, remedies:
• Cancel
• Sue for damages
 Not material breach, remedies:
• Damages in the form of a proportionate deduction of the rent
• Tenant may give notice and after notification period – effect the repair himself and deduct the costs
of repairs from the rent

The great end of life is not only knowledge but also action – Thomas H. Huxley
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 REMEDIES (cont) Tenant (cont)

2. Landlord fails to maintain the property in proper repair

 Remedy:
• Cancel the lease contract
• Sue for damages
Or
• Claim for specific performance
• Damages

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 REMEDIES (cont) Tenant (cont)

3. Landlord is in breach of warranty against interference

 Remedy:
• Claim damages
• Obtain and interdict
Or
• Cancel the lease contract
• Damages

The great end of life is not only knowledge but also action – Thomas H. Huxley
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 REMEDIES (cont) Tenant (cont)

4. Property is sold during the lease period (huur gaat voor koop)
 Hire takes precedence over sale
 Effect: sale of property cannot prejudice the tenant, since the buyer at the time of the sale
had actual or constructive notice of lease
 The new owner simply steps into the shoes of the original landlord
 This principle does NOT apply to movables or to property that is expropriated (or
confiscated) by the State
 Lease LESS than 10 years: new landlord will only be bound if s/he knew or if the tenant is
in occupation of the premises
 Lease LONGER than 10 years: new landlord will only be bound if s/he knew of the long
lease or if the lease is registered against the title deeds of the property
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 REMEDIES (cont) Tenant (cont)

5. Tenant makes improvements to the leased property

 Improvements that are necessary – is to protect the property

 Improvements that are useful – is to improve the property and increase it’s value
 Principle of placaat (edict): a tenant may remove useful improvements made to the
premises or claim compensation for them in respect of leases over rural property
 This is only improvements that was made with the landlord’s express and tacit consent
and not to those that may have been necessary for the protection of the property
 May only remove improvements if it does not damage the property

The great end of life is not only knowledge but also action – Thomas H. Huxley
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 REMEDIES (cont)

5. Tenant makes improvements to the leased property

 Remedy:
• Compensation only once the lease has terminated and s/he has vacated the property
• Compensation is awarded according to the costs of the material used to make the
improvements
 Under placaat:
• Necessary improvements: compensation is limited to the actual expenditure & labour
costs
• Ploughing and cultivation on agricultural land: compensation is limited to the cost of the
word and seed

The great end of life is not only knowledge but also action – Thomas H. Huxley
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 REMEDIES (cont) Tenant (cont)

5. Tenant makes improvements to the leased property

 Under placaat (continue):
• Structures erected with the landlord’s consent: includes building, fences, dams or even
irrigation systems. Compensation is limited to the cost of the materials
• Trees or orchards planned with the landlord’s consent: compensation is limited to the
cost of the trees at the time of planting

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 REMEDIES (cont) Landlord

Remedy for the landlord:

Under the common law the landlord has remedies available in 4 different situations:
1. Tenant does not pay rent
 Common law principle, landlord cannot cancel the lease unless the tenant was in arears
with his/her rent for a period of two years
 SA law: landlord may give notice of intention to cancel if payment is not made within a
reasonable time
 Landlord has a form of security over movables on the leased premises known as the tacit
hypothec

The great end of life is not only knowledge but also action – Thomas H. Huxley
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 REMEDIES (cont) Landlord (cont)

 Landlord may only exercise the tacit hypothec over goods belonging to persons other than
the tenant if all of the following requirements have been met:

i. Goods are on the property with the implicit/explicit consent or knowledge of the owners
ii. Goods are there for the use of the tenant
iii.Landlord had no knowledge that they belonged to a third party
iv.The goods are on the leased premises with some degree of permanence

 What about credit agreements??? The goods will be subject to the hypothec while on the
premises, unless the seller makes it clear to the landlord that the seller does not consent.

The great end of life is not only knowledge but also action – Thomas H. Huxley
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 REMEDIES (cont) Landlord (cont)

2. Tenant misuses the property

 Material breach, remedy:
• Cancel lease agreement
• Eject tenant, with or without damages
Or
• Apply to court for an interdict to prevent tenant from misusing the property

3. Tenant fails to return the property at the end of the lease or ‘holds over’
 Remedy:
• Eject tenant as a trespasser by due process of law

The great end of life is not only knowledge but also action – Thomas H. Huxley 18
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 REMEDIES (cont) Landlord (cont)

4. Tenant returns the property in a damaged state

 Remedy:
• Damages, unless the tenant can prove the injury was not caused by the tenant’s
negligence or wrongful act or by the negligent or wrongful act of a person for whom
s/he is responsible

The great end of life is not only knowledge but also action – Thomas H. Huxley
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 TERMINATION

1. Expire of the lease period

2. Notice

3. Death, a lease will terminate on the death of either party

4. Insolvency of the tenant, see the Insolvency Act.

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Different Legislations that can also be applicable in the lease
contract

1. The Rental Housing Act 50 of 1999.

2. The Consumer Protection Act 68 of 2008.
3. The Land Reform (Labour Tenants) Act 3 of 1996
4. The Extension of Security of Tenure Act 62 of 1997
5. The Prevention of Illegal Eviction from and Unlawful Occupation
of Land Act 19 of 1998

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