The Consumer Protection Act has far-reaching consequences on the relationship between landlords and tenants.
For many years, lease agreements favoured the rights of landlords, leaving tenants to largely accept what landlords imposed, or find accommodation elsewhere. Protected by the common law of freedom to contract, a large number of landlords manipulated lease agreements to protect themselves and their rights, often to the detriment of tenants.
Essentially tenants were forced to toe the line, even in cases where the lease agreement was totally one-sided and offered them little or no protection. On occasion, the courts would side with the tenant in recognising the unequal bargaining power situation and interpret clauses that favoured the landlord more strictly. The discretion of the courts to put a spin on clauses and come to the aid of tenants has now been formalised under the Consumer Protection Act.
There are certainly those who feel that that the new legislation offers tenants too much leeway and by, giving the person who leases the premises more rights, believe that the Act unfairly discriminates against the property owners themselves. Regardless of how aggrieved property owners feel, the law is now distinctly on the side of consumers and the courts are likely to come down hard on those who refuse to comply.
The CPA has changed the entire landscape between landlords and tenants.
Prior to the CPA, tenants signed a lease for a specified period and if they cancelled the agreement before the lease period was up, they could have been held liable for all the amounts outstanding for the duration of the lease. Under the new law, in terms of Section 14, the tenant can cancel the lease on 20 business days’ notice, although the landlord is entitled to levy a reasonable cancellation fee for early termination of the lease.
Another aspect that landlords are not going to be able to manipulate is the wording of the lease agreement. Prior to the CPA most, if not all, lease agreements were written in an extremely legalistic way and, generally speaking, it took a legal qualification to understand the terms and conditions of the document. Under Section 22 of the new Act, the lease must be written in plain language that is understandable by lay people and the prospective tenant in particular.
In terms of the CPA, plain language is language that is understandable to that class of tenant for whom the lease is intended, with average literacy skills and minimal experience as a tenant. The CPA, however, only stipulates that a lease must be in plain language. It doesn’t state that the landlord has to ensure that the tenant understands the wording of the lease. The lease also has to be in a language that the tenant understands; however, this does not necessarily have to be the tenant’s home language.
Landlords can also no longer contract out of their obligations in terms of the property. In the past, although common law protected the rights of tenants, landlords often flouted this area of the law, inserting unreasonable clauses, thereby effectively imposing conditions on tenants from a position of power. This will prove all-but-impossible under the new legislation and landlords are not only going to have to maintain properties to a satisfactory standard, but are going to have to bear the cost of repairs of any major fixtures on the properties. A good example of this is geysers. If a geyser bursts, it is now the responsibility of the landlord to rectify the fault and the landlord cannot escape this obligation by inserting a clause to the contrary in the lease.
In the past many landlords did not take fair wear and tear of the property into consideration and many assumed that any repairs carried out on the property after a tenant had vacated were for the tenant’s account. If, for example, a tenant resides in a property for some years and the exterior needs to be painted, the owner cannot hold the tenant responsible for the cost. Obviously, if the tenant wilfully damaged the exterior paintwork this will have a different outcome.
The rents that landlords charge has also come under the CPA’s microscope and section 48 of the CPA states that a supplier may not enter into an agreement in respect of any services at a price that is unfair, unreasonable or unjust or on terms that are unfair, unreasonable or unjust.
Given the complexity of the new laws and the scope which they cover, it is highly likely that some of the clauses will be challenged in a court of law and for this reason it is essential that tenants know and understand their rights.
Under the CPA, disputes involving leases no longer necessarily have to be resolved in a court of law (or by arbitration). Tenant can now, in different scenarios, refer matters to the National Consumer Tribunal (if permitted by the Act), refer the matter to an Ombudsman with jurisdiction, apply to a Consumer Court for relief, refer the matter to an Alternative Dispute Resolution Party or file a complaint with the National Consumer Commission. If none of these choices appeal, the tenant is also, in terms of the Act, entitled to approach the courts.
Written in conjunction with Alan Levy of Alan Levy