Guiding consumers since 2009

Your rights when your landlord sells

By Danielle van Wyk

One of the downsides of renting a home is that you’re not lord of the manor. This is because landlords have the authority to make some changes with or without your consent.  
If a landlord wants to sell the home that you are renting it can become problematic.  

This situation can be daunting and the inconvenience of having to find a new place on short notice and moving earlier than you expected can take its toll on you financially and emotionally.
But you do have rights. According to a report, your tenancy agreement still remains in place and has to be terminated the proper way.

Study the contract
It’s crucial to go through the contract you signed with the landlord or agency, says Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa. “In terms of the legal principle the lease agreement precedes the sale.As a result the tenant is within their right to retain occupation of the property for the remainder of the agreed upon lease period.”  

But if there is an early termination lease clause for instance, you may then be obligated to move. This is why it’s so important to be armed with all the relevant information before you sign your lease and know your rights and obligations.  

What are my rights?

“According to South African legislation, a landlord is not prohibited from selling the rental property to a third party while the property is occupied by a tenant and there is a leasing agreement in place.”

But the tenant’s right to terminate the agreement is largely determined by the contract that they signed and what the law stipulates. The initial step would be for the tenant to read their lease agreement to see where they stand and what obligations they have contractually bound themselves to,” explains Goslett .

“In certain cases, there may have been a sales provision made in the agreement for such a situation,” adds Goslett. “If agreed upon at the signing of the lease, there might be a stipulation giving the tenant [the right] to cancel their current contract should the property be placed on the market.  If these are the terms and there is mutual consent, the tenant is absolved from any penalties that may arise due to breeching the agreement.”

If no such stipulation exists, all terms and conditions in the lease before the sale of the property will be carried over to the new owner of the property. Essentially what this means is that it is far more difficult to get out of the contract, if nothing has been specifically stated in the lease with regards to the sale of the property.

In this case, if the tenant breaches the lease agreement they could face paying a penalty of some kind. Goslett noted further that the “lease agreement will remain in effect under the new landlord and the tenant will be obligated by law to respect the stipulated terms, as will the new landlord.”
“It is possible for a buyer to purchase a rental property with the intention of retaining to the tenant.  If this is the case they will more than likely not want to release the tenant from their contractual obligations,” said Goslett.

In terms of the Consumer Protection Act (CPA), a fixed term contract within the fixed term can be terminated early on the condition that the new owner is a supplier who lets the property in the ordinary course of his business.

This is regulated by section 14 of the Act.  In these kinds of situations a tenant is able to give a 20 business day notice period during the term of the lease. However, they would then be liable for the notice month and possibly a reasonable penalty fee. Goslett says that the CPA will not be applicable if the parties to a lease agreement are both juristic persons. 

“Ideally, before the tenant makes any decisions about cancelling their lease agreement, they should first communicate with the landlord. Discussing the matter could help put certain issues to rest and there may be little or no need for concern. There is the possibility that the sale of the property only takes place after the period of the lease agreement has expired, or the new landlord may be better than the current one,” he concludes.

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