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 Corona blog 1000c500

Lease Agreements: Landlord versus tenant: 2020.

I have received dozens of queries since the 26th March 2020 and the start of the official lockdown which relates to what the law has to say about certain aspects of Lease Agreements and the Corona Virus pandemic.

In this unprecedented time, both landlords and their tenants are concerned about the future and what the effect the lockdown has on the validity and content of their leases. Whether tenants are still obliged to pay rent or levies in terms of their lease? Whether the legal principles of force majeure or vis major apply to them or not etc.

Landlords realise, as well, that they are seriously at risk of losing tenants en masse or that they might end up having to instruct legal practitioners to attend to mass evictions of non-paying tenants; and tenants, on the other hand, who are either self-employed (but non-essential), unemployed, are not being paid a full salary or have been retrenched are simply trying to save money and survive; but at the same time have to have a roof over their heads and that of their families.

There are trying times.

I will try to explain and interpret certain issues and aspects of the law, in this blog, which has been raised with me in phone and email correspondence both from tenants and landlords over the last two weeks.

  1. Does Force Majeure apply to my lease agreement?

Do I have a Force Majeure or Vis Major clause in my rent agreement and how does that affect me?

The Golden Rule, in all of these case, is that one must first have regard to the terms and conditions of the lease itself. It is for this reason that I will ALWAYS ask to see a copy of your lease before I can even give you an opinion on your rights and obligations in each specific case referred to me.

Firstly; on certain questions I have been asked:

What is a Force Majeure or Vis Major and how does it apply to a lease?

Let us have a look at its definition of these two terms in some court cases:

In the case of:

Joint Venture between Aveng (Africa) (Pty) Ltd and Strabag International GmbH v South African National Roads Agency SOC Ltd and another, the court gave us some guidelines and accepted that in order to qualify as such an event ie a force majeure or a vis major; that event must meet certain factual criteria and it defined those essential criteria, when it comes to a contract, as:

(a) It must be, or must have been, unforeseeable at the time the parties entered into the contract (in our example a lease);
(b) It must be or must have been unavoidable in its impact or occurrence; and
(c) Lastly; it must be, or must have been, impossible to overcome.

If we apply these three criteria to our example of a lease agreement what are the answers vis a vis COVID 19?

One could certainly argue that the answer is “yes. it is” to all three criteria.

In another case, heard in the Supreme Court of Appeal in Bloemfontein in the matter of:

Transnet Ltd t/a National Ports Authority v Owner of mv Snow Crystal, that Court stated in its judgment that one has to ascertain and examine the contract ( in our example, the lease) in order to establish:

(a) The nature of the contract;
(b) The relationship of the parties to the contract;
(c) the circumstances and actual facts of the case, and
(d) the nature of the impossibility invoked by the defendant (in our example a tenant), to see whether the general rule ought, in the particular circumstances of the case, to be applied (ie in our case scenario of a lease); whether a force majeure or vis major had been established on a balance of probability.

Once again; if we now apply these four criteria to our example of a lease agreement what are the answers vis a vis COVID 19?

It depends on the facts of each and every case and therefore:

I need to apply them to the specific facts of your case and the terms and conditions of your lease to get an answer.

It is therefore abundantly clear, on both the facts and the law that each individual case needs to be looked at on its own merits and this is not a case of “one size fits all”.

That is however not all and there are also a further two important aspects which need to be applied to our example of a lease agreement and whether the landlord can compel the tenant to pay rent or not; or whether there is a right to even uphold the lease agreement in this time of COVID 19.
In my view they are the following, and once again are in the form of questions asked of me.
Is a tenant, in these unusual times, entitled to a reduction in their rent or a “rental holiday”?

Once again one has to see what the law says in this regard.

In Hay v the Divisional Council of King William’s Town the High Court stated that:
“Where the law imposes a duty, and the party is disabled from performing it, without any default of his own, by the act of God or the Queen’s enemies, the law will excuse him; but where a party by his own conduct creates a duty or charge upon himself, he is bound to make it good, notwithstanding any accident by inevitable necessity.”

Also in the High Court in Cape Town in the matter of:
Mount Stephens & Collins v Ohlssohn’s Cape Breweries, the court noted that the remission for rental in circumstances where the beneficial occupation (by the tenant) is absent: “… that a lessee is entitled to remission of rent, wholly or in part, where he has been prevented wholly or to a considerable extent in making use of the property for the purposes for which it was let, by some vis major or casus fortuitus, provided always that the loss of enjoyment of the property is the direct and immediate result of the vis major or casus fortuitus, and is not merely indirectly or remotely connected therewith.”

Once again, we see that each case needs to be looked at on its own merits and one cannot give an answer to these questions which applies to all cases or even, for that matter, to your particular case. This applies to almost every single query I get.

Yet another aspect of these uncertain times is the issue of whether or not in your case, the lease may be suspended because the tenant is not able, in certain circumstances, to enjoy beneficial occupation of the premises.

An example of some questions in this regard:
“I am a tenant in a flat in Rosebank in Cape Town, but I am now in Johannesburg under lockdown in my parents’ home for the duration of this lockdown process. Do I still have to pay rent; as I cannot use the flat and it is standing empty”?

Another question:
“ I am a third-year student at UCT, and as my home is in Pretoria and the University is closed; are my parents still liable to pay the landlord the rent on my flat in Observatory while I am not staying there, during this period of the National lockdown”?

So another aspect of leases which leads to these questions is the tenant’s right to enjoy beneficial occupation and possession of the property leased.
The terms and conditions of most leases deal with the situation where the property is destroyed or damaged, or partially destroyed or damaged, by, for example, a fire or flood and are uninhabitable but what about the current lockdown?
Again one first looks at the actual terms and conditions of the lease to analyse and identify ones legal rights.

Case Law can again help:
Beneficial Occupation is a right for a tenant.

In the High Court case of

Zweigenhaft v Rolfes, Nebel & Co, the Court had to deal with and interpret a Government Resolution of the late South African Republic which closed all premises licensed to sell liquor; and the main question was: Did this resolution constitute a vis major situation in the case of premises which was let by the tenants from the landlords, specifically for the purposes of running a bar. In short, the Government decree closed the bar and a lessee who cannot use the property for the purpose for which it was intended argued before the Court that this should entitle them to a remission of their rent, and they also argued that in terms of their contract of lease they were not entitled to use the property for any other purpose.

The Court stated that: “Where the enjoyment of property for the purposes for which it was let is hindered or prevented by some vis major happening, without the default, actual or constructive, of either the lessor or the lessee, the latter (the tenant) may claim a remission of rent for the period during which the enjoyment is so hindered.”

Although this is an old case and the facts specific to it; does not the same principle apply today?
The answer to that question depends entirely on the facts of your particular case, the terms of your lease and the current promulgated Government regulations applicable to the lockdown.
Each case will be different.

In conclusion and summary:
Each of your situations needs to be examined and assessed with due consideration to its own specific merits, and one must consider amongst other aspects, the following:

1. If there was a force majeure or vis major event; and whether it applies in your case and circumstances;
2. Whether the performance of your obligations in terms of the lease agreement is still possible or impossible, not just difficult and assessed on the legal test of reasonableness.

3. Whether the beneficial occupation of the premises has been deprived and whether this is not the result of the actions of the tenant; and lastly
4. All Landlords and their tenants are urged to negotiate and find mutually agreeable and feasible ways of dealing with this current very real and sometimes devastating situation.
5. Professional mediation and alternative dispute resolution procedure should always be employed and this would be my final advice to both landlords and their tenants.

 

Please visit our website at www.legaladviceoffice.co.za or send us an email to This email address is being protected from spambots. You need JavaScript enabled to view it. with your legal questions.
About our author:
Hugh Pollard (Legal Consultant), has a BA LLB and 42 years’ experience in the legal field. 22 years as a practising attorney and conveyancer; and 20 years as a Specialist Legal Consultant.
082-0932304 (Hugh’s Cell Number)
This email address is being protected from spambots. You need JavaScript enabled to view it.
www.legaladviceoffice.co.za

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