What happens when a landlord or a tenant wants to cancel a lease? What rules and what legislation apply? What protection does the law provide?
These are the questions which Chantelle Gladwin and Renand Pretorius - partner and candidate attorney at Schindler’s Attorneys - ask in an article recently circulated to the company’s followers.
They make the point that the cancellation of a lease is often neither an easy nor a simple affair.
Cancellations: Rental Housing Act & Consumer Protection Act
They prefaced their discussion with an explanation of the difference between cancelling before the agreed termination date, and cancelling during the contract period as a result of breach of contract. (Examples of cases of breach of contract: if the tenant fails to pay the rent on time, or if the landlord fails to perform his or her duties as stipulated in the contract).
If, said Chantelle and Renand, you want to end your contract early, this can only be done “in situations where the Consumer Protection Act or Rental Housing Act apply” - or if there’s a clause in the contract that allows for early cancellation, or if both parties agree to it.
If, on the other hand, one of the parties wants to cancel because the other is in breach of the contract, then certain notice periods come into effect - the first of which being, of course, that the aggrieved party is required to “give written notice for the breach to be remedied. Failure to remedy the breach in the stipulated time period, will entitle the innocent party to cancel the lease and (where relevant) claim damages suffered from the offending party.”
Rental Housing Act
The Rental Housing Act comes into play in situations where tenants continue to occupy the premises after the expiry of the period set down in the written agreement. In such cases, said Chantelle and Renand, “the lease will continue to run on the same terms and conditions as contained in the written document, save that the duration of the lease will be only one month (i.e. a month to month lease situation will arise)” - so, if the landlord wants the tenant to leave, he or she must provide the tenant with one calendar month’s notice.
Chantelle and Renand pointed out, too, that in terms of the common law, you can only give notice at the beginning of a calendar month: on, say, the 1st of May for the 31st - and not, for example, on the 14th of April for the 15th of May.
Consumer Protection Act
The Consumer Protection Act (CPA), said Chantelle and Renand, “expressly defines residential accommodation as a service” - meaning that, except in rare cases, it covers the question of residential leases.
Strictly speaking, the CPA will also only apply where the property is being let out by the landlord or owner in his or her ‘ordinary course of business.’
According to Chantelle and Renand, the Act allows consumers (i.e. tenants) to cancel fixed term leases “for any reason whatsoever (which may be entirely unrelated to a breach by the ... landlord) by giving the landlord 20 days written notice of the cancellation.” (Although, of course, it also provides that the landlord is entitled to a ‘reasonable cancellation penalty’ - guidelines for which are provided for in Regulation 5 of the Act).
The landlord, on the other hand, “can only cancel a tenant’s lease if the tenant has breached the lease,” and if, “after having given 20 business days written notice to the tenant to remedy the breach,” the tenant still fails to comply.
“This is critical,” said Chantelle and Renand, “because it applies despite what the lease says – it thus overrides the provisions of the lease” (and, in fact of the common law, too - which would have applied if certain aspects of the agreement had been accidentally omitted from the original agreement).
“Common law is relevant because it is the ‘default’ position that ‘kicks in’ when the parties omit to reach agreement on certain terms of a lease,” said Chantelle and Renand.
This is not, they said, such an uncommon situation. “For example, the parties might forget to agree on how many days written notice is required for a tenant to make good a breach before a landlord can cancel, or how many days / months notice must be given if either party wants to terminate the lease before its natural end.”
They noted, however, that “the common law will always be subservient to any legislation that has been subsequently enacted to deal with a particular problem,” and that legislation that deals with a problem in general is generally subservient to legislation designed to deal with a specific problem.
“To confuse the matter further,” they said, “the Consumer Protection Act (which is not specific to leases) says that if its provisions conflict with any other law, the law that provides the most protection to the consumer will apply.”
For this reason, at least, their best advice is that you seek competent legal before you try to cancel a lease - whether for breach of contract (if you’re a tenant) or for early termination (if you’re a landlord - especially if you want to “ensure that you don’t find yourself supplying your pesky tenant with accommodation (and paying him/her damages) for unlawfully evicting them.”