The dos and don’ts for landlords regarding the Rental Housing Act
In South Africa, the Rental Housing Act lays out important dos and don’ts for landlords. By adhering to these guidelines, landlords can maintain positive, lawful relationships with tenants, ensuring a fair and transparent renting experience for all parties involved. Landlords play a crucial role in providing safe and comfortable homes for tenants. In South Africa, the Rental Housing Act (“the Act”) provides guidance on the rights and responsibilities of both landlords and tenants. Understanding the provisions of this Act is essential for landlords to maintain a positive and lawful landlord-tenant relationship. Here are some dos and don’ts for landlords based on the Act: Dos: Provide written receipts: The Act requires landlords to provide tenants with written receipts for all payments received. These receipts should include the address, description of the residence, the purpose of payment (e.g., rent, arrears, deposit), and the payment period. Invest tenant deposits: Landlords are required to place tenant deposits in an interest-bearing account with a financial institution. The interest rate must be at least equal to that of a savings account with a financial institution. Inspect the residence with tenants: Before a tenant moves in, conduct a joint inspection of the residence to identify any pre-existing defects or damages. This inspection helps determine the landlord’s responsibility for repairs. Arrange a joint inspection upon lease expiry: Schedule a date and time to do a joint outgoing inspection with your tenants. The agreed appointment should be within three days before the lease ends, to assess any damages that occurred during their occupancy. Return deposits timely: If the tenant has fulfilled all lease obligations, return the deposit and accrued interest within 14 days of the restoration of the property to the landlord. Keep records: Maintain records of costs incurred for repairs or damages. These receipts should be available for the tenant to inspect as proof of expenses deducted from the deposit. Adhere to lease provisions: Ensure that the terms of the lease are followed by both parties and do not waive the standard provisions outlined in the Act. Include required information in lease agreements: In lease agreements, include details such as the names and addresses of both parties, a description of the residence, rental amounts and escalation, deposit information, the lease period, and obligations for both the tenant and landlord. If the parties enter into a verbal lease agreement, the landlord is obliged to reduce it to writing upon request of the tenants. Don’ts: Don’t delay inspections: Neglecting to inspect the residence with the tenant upon lease commencement or termination can be detrimental. It may be viewed as an acknowledgement that the residence is in good condition, which could hinder any future claims. Should the tenant refuse to respond to the landlord’s request to conduct an inspection, the landlord should inspect the property within seven days after the expiration of the lease agreement to assess any damage or loss which occurred during the tenancy. Don’t deduct costs arbitrarily: Deducting costs from the deposit for repairs without evidence can lead to disputes. The Act requires that costs be proven to the tenant. Don’t overcharge: Charging tenants for expenses related to the contract of lease without factual expenditure is prohibited by the Act. Don’t waive standard provisions: The standard provisions in the Act should not be waived by either the landlord or tenant, as these are in place to protect both parties. Don’t ignore house rules: If there are house rules applicable to the residence, provide the tenant with a copy as an annexure to the lease agreement. Don’t delay deposit refunds: Failure to refund deposits and accrued interest within the stipulated timeframe can lead to conflicts with tenants. Don’t leave the lease agreement to expire: If a tenant remains in the residence beyond the lease expiration date with the landlord’s expressed or implied consent, the parties are deemed to have entered into a periodic lease unless a new written lease is established. Either party can give notice of at least one month to the other party to terminate the lease. It may be more secure to enter into a new lease agreement for a fixed period. The Act aims to ensure fairness and transparency in landlord-tenant relationships. By adhering to its provisions, landlords can create a positive renting experience while safeguarding their rights and those of their tenants. Landlords need to familiarise themselves with the Act, uphold their obligations, and respect their tenants’ rights, as outlined in the Act. Ultimately, compliance with the Act is the key to maintaining harmonious and lawful landlord-tenant relationships. Reference list: Rental Housing Act 50 of 1999 While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither the writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes. Powered by SucceedGroup
The ABCs of lease agreements in South Africa
Navigating the world of lease agreements can be complex and fraught with potential pitfalls. In South Africa, these agreements are an essential tool for establishing clear expectations and protecting the interests of both landlords and tenants. Whether you’re a seasoned property manager, a first-time landlord, or a prospective tenant, understanding the nuances of these contracts can be critical to ensuring a positive leasing experience. Lease agreements, contrary to the perception of some, are not just a bureaucratic formality. They are a necessity that provides certainty by explicitly outlining the responsibilities of all involved parties. A well-drafted lease agreement reduces the likelihood of disputes arising and provides a solid foundation for resolving them if they do. Without a written agreement, any disagreement could become a “he-said-she-said” scenario, making it challenging to establish the truth of the matter. A common question often asked by landlords is: “What happens if my tenants stop paying rent? Can I evict them?” The answer, typically, should be found within the lease agreement itself, which usually outlines the procedures for dealing with such breaches of contract. However, in the absence of a written agreement, landlords can resort to the Rental Housing Act, which stipulates giving tenants a 30-day notice to vacate the premises. Equally, tenants may wonder what their rights are in cases where their landlord sells the property they’re leasing. Again, the lease agreement comes to the rescue, taking precedence over a sale agreement. In this case, the landlord is obligated to provide at least a 30-day notice to the tenant, allowing them to make necessary arrangements. It’s also important to note that landlords do not have the right to disconnect municipal services due to late or missed payments by the tenant. Such actions are considered illegal, and tenants have the right to institute legal proceedings to restore access to these services. In the event of damage to a rental property, the process of recovery and repair can be made smoother by a well-executed lease agreement. It’s crucial to conduct entry and exit inspections, with both the landlord and tenant present. This allows for a clear record of the property’s condition at the start and end of the lease. A tenant is granted a minimum of seven days from the occupation date to submit a snag list, providing a comprehensive overview of any existing issues. For landlords dealing with the scenario of squatters, it’s important to follow due process as outlined in the Prevention of Illegal Eviction from Unlawful Occupation of Land Act 19 of 1998. It’s illegal to hire a security company, change the locks, or restrict access to municipal services in an attempt to evict these occupants. Instead, a court order must be obtained. But what happens when disputes arise that can’t be resolved amicably? Thankfully, there are avenues for resolution. Claims can be brought to the magistrate’s court in the district where the agreement was signed or where the person defending the action resides. Alternatively, the Rental Housing Tribunal can be engaged, which does not require legal representation and can be a cost-effective solution. The world of lease agreements may seem daunting, but it doesn’t have to be. With a well-drafted agreement and a good understanding of your rights and responsibilities as either a landlord or a tenant, the leasing process can be a smooth and positive experience. Don’t take a chance on a handshake agreement when you can have the security of a professionally drafted lease agreement at your disposal. While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes and should not be construed as legal advice. Powered by SucceedGroup
Understanding mortgage bond cancellation: Key steps and considerations
In South Africa, the process of cancelling a mortgage bond is commonly necessitated when a property is sold or the bond is fully paid off. This procedure is intricate, consisting of several critical steps: Step 1: Notice of cancellation Initially, the property owner must submit a notice of intent to cancel the bond to the lending institution. This step typically requires a 90-day written notice. However, there are exceptions to penalty fees for failure to provide this notice, such as when the property is part of a deceased estate, a sequestrated estate, or if a new bond is being taken with the same institution. Step 2: Request cancellation figures Following the notice, a conveyancing attorney should be instructed to request cancellation figures from the lending institution. These figures, which include the outstanding balance, interest due, and service fees, are essential to determine the total amount needed to settle the remaining debt. Step 3: Settle outstanding amounts After obtaining the cancellation figures, the next step is to settle all outstanding amounts. This settlement usually comes from the proceeds of the property sale. It’s important to note that from the date the settlement figures are issued until the bond is officially cancelled, lenders charge interest on the outstanding balance. Also, if insurance premiums are debited from the home loan account, these should be transferred to a different account to ensure continuous coverage after bond cancellation. Additionally, cancellation fees, mainly comprising costs for the Deeds Office process and administrative fees, are handled by the conveyancing attorney and are the responsibility of the seller or bondholder. Step 4: Issue and receive the bond cancellation certificate Once financial obligations are settled, including outstanding amounts and necessary fees, the lender issues a bond cancellation certificate. This certificate is pivotal as it officially indicates that the bond against the property is fully settled with no remaining debts. Step 5: Registration of bond cancellation The bond cancellation must then be registered with the South African Deeds Office, a step typically managed by the conveyancing attorney. This registration is the legal acknowledgement that the bond is removed from the property’s title deed, which is vital for legally freeing the property from the bond. Step 6: Confirmation and finalisation Finally, upon completion of the bond cancellation registration, either the homeowner or the new property owner, if the property was sold, receives confirmation that the process is complete. This typically includes receiving a clean title deed, now free from any bond annotations. The bond cancellation process in South Africa is a meticulous and structured procedure. It starts with notification of intent, proceeds through obtaining and settling financial figures, involves paying legal and administrative fees, and culminates in the legal removal of the bond from the property’s title deed. This comprehensive process is crucial for ensuring clear property ownership transfer and finalising the homeowner’s financial obligations, thereby maintaining the integrity of property transactions and ownership in South Africa. While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither the writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes. Powered by SucceedGroup
Intending to buy a state-funded house? Here’s what you need to know
The Constitution of South Africa enshrines the right of everyone to have access to adequate housing. This places a mandatory duty on the state to achieve this right for all South Africans through its available resources. The government introduced the Reconstruction and Development Programme (RDP) as its social housing programme to provide low-income families with sustainable housing. Despite the substantial commitment by the government, there have been cases of illegal sales and fraudulent activities related to state-funded houses. The purpose of this article is to establish whether state-funded houses may be sold. Section 10A of the Housing Amendment Act (hereafter referred to as the “act”) is the relevant provision to consider in the regulation of the sale of state-funded housing. Section 10A of the act provides that notwithstanding any provisions to the contrary in any other law, it shall be a condition of every housing subsidy, as defined in the Code, granted to a natural person in terms of any national housing programme for the construction or purchase of a dwelling or serviced site, that such person shall not sell or otherwise alienate his or her dwelling or site within a period of eight years from the date on which the property was acquired by that person unless the dwelling or site has first been offered to the relevant provincial housing department. In the case of Adul v William and Others, the appellant concluded an agreement of sale and purchased a property from the respondents. Upon establishing that the property was subject to a restrictive condition imposed by section 10A of the act, the parties subsequently concluded another agreement wherein they agreed that the appellant would rent the property until the restrictive condition expired. The appellant was also required to pay municipal rates and taxes in terms of the second agreement. The appellant fell in arrears with paying the municipal rates and taxes. The respondents instituted eviction proceedings against the appellant in the Magistrate’s Court. The appellant was ordered to vacate the property, which she refused. Aggrieved by the order, the appellant appealed the decision to the High Court and among her issues were that: The act did not explicitly state that an agreement made in violation of section 10A would be rendered null and void. The lower court (court a quo) should have considered the inconvenience and impropriety caused by declaring the sale agreement null and void. The court found both agreements to be void ab initio (have no legal effect from inception), and thus nullity because their conclusion contravened the restrictive provisions of s10A of the act. Neither the appellant nor the respondents are the owners of the property. The ownership reverted to the relevant department of housing. The court held that the interpretation of s10A of the Act must be viewed in the context of the government’s constitutional obligation to provide adequate housing for indigent persons. The absence of the restriction provided for in s10A of the act would permit persons who were not indigent, to buy state-subsidised houses meant for the poor to profit from the sale or lease of such properties on the open market. Clearly, that would frustrate the objective of the act. Considering the foregoing, the act restricts the voluntary sale of state-funded houses, because it goes against its main objective. The provisions of section 10A of the act need to be clearly considered by the RDP prospective buyers before they pay any purchase price or conclude any agreement of sale. Reference list: Abdul v Williams and Others (CA227/2018) [2019] ZAECGHC 103 The Housing Amendment Act 4 of 2021 WRITTEN BY SINAZO MAU-MAU Sinazo Mau-Mau is an Attorney at Miller Bosman Le Roux Attorneys. While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes. Powered by SucceedGroup
Domicilium Citandi Et Executandi in South African Law
How is it possible that someone can obtain judgment against me, without my knowledge of any summons issued against me or a court date to state my side of the story? Well, in our law this could happen if you agreed to a domicilium address without notifying other parties about a change therein when you move away from said address What is domicilium citandi et executandi? Domicilium citandi et executandi (hereinafter, “domicilium address”) is a Latin term that means “house for being summoned and executed upon.” In South African law, it refers to the address that a person nominates in a contract as the address where they will receive all legal notices and processes. This address can be a physical address, such as a home or business address, or it can be an email address. Where did the concept of a domicilium address originate? The concept of a domicilium address originated in Roman law. In Roman law, a person’s domicile address was the place where they were a resident for legal purposes. This meant that all legal notices and processes had to be served at the person’s domicile. How is a domicilium address used in today’s contracts? A domicilium address is commonly used in today’s contracts. This is because it allows parties to a contract to specify the address where they want to receive all legal notices and processes. This can be helpful in ensuring that parties are aware of any legal proceedings that are being brought against them. What are the pitfalls of a domicilium address? There are a few potential pitfalls associated with a domicilium address. One pitfall is that if a person moves and does not notify the other party to the contract of their new address, they may not receive legal notices or processes that are served at their old address. This could result in a default judgment being entered against them. Another pitfall is that if a person’s domicilium address is a physical address, and that address becomes inaccessible, they may not be able to receive legal notices or processes that are served at that address. This could also result in a default judgment being entered against them. In the matter of Amcoal Colleries Ltd v Truter 1990 (1) SA 1 (A), the Supreme Court of Appeal held that a person’s domicilium citandi et executandi can be chosen in a contract, and that service of process at that address is good service, even if the person is not present at the time. How can you avoid judgment against you when the domicilium address is no longer a place you can access? Firstly, you should make sure that you notify the other party to the contract of your new address as soon as possible. Secondly, you should keep track of your mail and make sure that you open all of it, even if it is addressed to your old address. Thirdly, you should check your credit report regularly to make sure that there are no judgments against you that you are unaware of. Example: Suppose John signs a lease agreement with a landlord. The lease agreement includes a clause that states that John’s domicilium address is the address of the premises. John then moves from the premises to another place without notifying the landlord of his new address. If the landlord then sues John for breach of the lease, the landlord can serve the summons on John at the address of the premises, being the domicilium address. Even if John does not receive the summons, he will still be bound by the judgment if he does not respond to the lawsuit. Domicilium citandi et executandi is an important concept in South African law and it is important to understand the implications thereof before you sign a contract. If you are unsure about what your domicilium address is, you can consult with an attorney. While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes. Powered by SucceedGroup
What happens to your deposit if the home sale falls through?
It depends on which party is responsible. It’s every home buyer’s worst nightmare. You find your dream home; your offer is accepted; and you pay a deposit—only for the sale to fall through before the property is transferred into your name. The question now is, where does this leave your hard-earned deposit? The answer depends on the terms of the purchase agreement, and the reasons for cancellation. It is also largely dependent on which party is responsible for the sale falling through. If you, the buyer, are in breach of contract, and the breach cannot be rectified within a stipulated time frame, you could lose your deposit. The seller has the right to use the deposit to cover any damages—such as legal costs or agent’s commission—that have been incurred as a result of the transaction falling through. A variety of factors may be considered a breach of contract under property law, with the most common one being a homebuyer backing out after signing an Offer to Purchase (OTP). What constitutes a buyer’s breach of contract? While the sale of land in South Africa is governed by the Alienation of Land Act and must be in writing, the buying of a home is most importantly a contract. The contract needs to list all conditions of the sale that are important to you so that there is no room for uncertainty. That can range from when occupation takes place and whether there is occupational rent or not, to whether the pool pump works or the retractable washing line stays. The OTP or Sales Agreement usually also includes ‘suspensive conditions’—certain conditions that must be met in order for the contract to be enforced. The most usual one is whether you will need a home loan approved to secure the finance for the purchase. Once the OTP or Sales Agreement is signed by all parties involved in the property transfer, it is considered binding, and both the buyer and the seller are obligated to fulfil their parts of the transaction. This means that if the buyer pulls out after signing, they may incur significant penalties, including the loss of their deposit. However, if the reason for the sale failing through is due to any of the suspensive conditions not being met, the contract falls away, and they will get their deposit back. Examples of suspensive conditions can include the requirement for a buyer to conduct a home inspection in a timely manner and be satisfied with the outcome—for example, checking the roof structure. However, the most common suspensive conditions are the requirement for the buyer’s financing (home loan) to be approved, and the requirement that the buyer’s current property be sold first. This is known as a ‘subject to’ sale. Buyers are strongly recommended to consult with a lawyer when including suspensive conditions, as these are there to protect the buyer to make sure they are ready to fully commit. Having those suspensive conditions in place can protect your deposit. The last scenario is the seller breaching the contract—for example, breaching a warranty. Cancellation might not be the only remedy for the home buyer. However, if the home buyer is able to cancel because the seller breached the agreement, the home buyer will be entitled to their deposit back. Your deposit is safe should the seller not fulfil their obligations. Other reasons why a sale may fall through The specific reasons for a sale falling through can vary, and these circumstances determine what happens to the deposit. Instances where the buyer can forfeit the deposit if the sale falls through include: When a buyer deliberately withdraws their home loan application: Regardless of whether the home loan is approved or not, withdrawing an application is a breach of contract if a home loan is needed to finance the purchase. Buyer’s remorse: A buyer may get cold feet and choose to pull out after signing, without a legally permissible reason. No attempt to meet suspensive conditions: While suspensive conditions are intended to protect the buyer, they will forfeit their deposit if no attempt is made to meet them. For example, if the purchase is contingent on a buyer’s home selling, they must prove that they have made efforts to market it. Instances, where the deposit is refunded to the homebuyer, should the sale fall through: Failure to secure funding: If the OTP is contingent on securing funding and their home loan application is denied for whatever reason, the deposit will be refunded. Breach of contract by the seller: If the seller breaches the contract and the buyer cancels as a result of such breach, the buyer is entitled to their full deposit back. Title deed and legal issues: If the transaction fails due to outstanding payments owed by the seller, or title deed disputes surrounding the property, the seller is in breach and the buyer will have their deposit returned. Guaranteeing the safety of your deposit While the vast majority of home sales are successful, it’s important to remember that there is always some risk that a sale may fall through. Both buyers and sellers should be aware of this possibility when entering into a property transaction. The deposit—which is held by a conveyancing attorney, estate agent, or secure platform like Buyers Trust—is meant to serve as a show of the buyer’s commitment to the home purchase, and an assurance to the seller that the buyer will honour the agreement of the OTP. Should the sale fail and the buyer is not at fault (for example, a condition precedent isn’t met), the buyer needs to be 100% assured that the deposit will come back straight to them, together with interest for the time it was invested. WRITTEN BY Jackie Smith Jackie Smith is the head of Buyers Trust. While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based