Legalities of selling a tenanted property

Legalities of selling a tenanted property

Private Property South Africa
Sarah-Jane Meyer

Imagine tenants who have been in a rental property for a few years. They are happily settled and are sure they can cover the rent for another five or six years. Then their landlord notifies them that he has decided to sell the property.

Fortunately, say Gunston Strandvik Attorneys Inc, the South African law makes provides for these scenarios.

Can tenants remain on the property?

“Although landlords are legally allowed to sell their rental properties to a third party while the property is occupied, the legal principle known as ‘huur gaat voor koop’ applies,” says director Ulrik Strandvik.

This means that the lease has precedence over the sale. In other words, tenants are within their rights to remain on the property until the end of the lease period. This principle protects the tenants from eviction while the lease is in force.

The lease automatically transfers to the new owner, with all the contract conditions remaining the same for the duration of the lease.

Cancelling the lease

In some cases, tenants may prefer to move out of a rental property when a new landlord takes over. The question is whether tenants can cancel a lease without penalty. Strandvik says this depends on the law and the lease agreement.

Regarding the lease agreement, some leases include a sale provision that gives landlords and their tenants more flexibility. This sale provision might give tenants the right to cancel the contract if the property is placed on the market. In this case, tenants can cancel their contract without breaching the terms.

According to the law, if there is no sales provision in the agreement, the agreement will transfer to the new property owner, and tenants may face penalties if they cancel the lease. However, in some cases, the lease agreement will fall under the Consumer Protection Act (CPA), in which case tenants have various rights when it comes to cancelling the lease.

Communication

To avoid any unpleasantries during the sale or handover process, Strandvik suggests that landlords and tenants communicate clearly before and during a sale.

This will ensure that both parties know exactly where they stand, and tenants and new owners know exactly what is expected of them.

Writer: Sarah-Jane Meyer

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