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Many consumers are under the pump as far as their lease agreements are concerned.

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Some private individuals who are leasing from private landlords are struggling to pay high rentals to keep a roof over their own and their family’s heads.

Commercial tenants, who are tied into long term commercial leases with their landlords, are finding it more and more difficult to fulfil their contractual obligations to their landlords as the economy contracts and finances become tighter.

The question then is: What can one do when one is caught in this financial vice?

The answer is not an easy one.

 The Consumer Protection Act, No 68 of 2008 (CPA), and its effect on the law of lease.

How do I cancel my lease?

One has to bear in mind both the common law and also legislation; in particular the Rental Housing Act for residential leases; and the CPA; as it regulates both residential and commercial lease.

The first thing to do is to try and understand the law and here you need proper, professional advice.

The Elements of a valid lease

  It should first be noted that a lease is treated as the supply of services for the purpose of the CPA (and not as a supply of goods, even though immovable property is included under the definition of ‘goods’ and ‘supply’ in relation to goods is defined as including ‘rent’ and ‘hire’ in the ordinary course of business for consideration).

 It has been controversial as to whether a lease by a private individual who only rents out one flat can be regarded as a ‘supply of services’ — namely, whether it is done in the ordinary course of business.

In this regard; we need to look at section 5 of the CPA and its effect on the Application of the Act. 

The application of the CPA is limited to the supply of goods or the performance of services.

Both of these terms are defined. The definitions are very broad and they encompass virtually every conceivable good or service. There are however important caveats which should always be borne in mind. Certain services are excluded from the ambit of the Act in terms of the definition of 'services' in section 1. 

The definition of 'service' includes the provision of 'access to or use of any premises or other property in terms of a rental or any other 'right of occupancy of, or power or privilege over or in connection with any land or other immovable property'.

This is an important provision as regards lease agreements.

Save for a sale of immovable property, it would, therefore, appear that the supply of all other rights in immoveable property will constitute a service rather than a good. 

The classification of a product as either a good or a service is important as the consumer has different remedies depending on the classification when it comes to the quality of goods versus services.

The former is regulated by sections 55 and 56 and the latter by section 54. 

In addition, while a consumer has the right to claim for harm caused by defective or unsafe products in terms of section 61, the same cannot be said of services.

While it is clear that granting access to immovable property in terms of a 'rental' is a service, granting temporary access to movable property through a 'rental' is harder to classify.

The use of 'supply' in relation to goods includes 'rent' and 'hire' which creates the impression that the 'renting' of movable property will be classified as goods, even though it is not referred to directly in the definition of goods.

However, the definition of 'services' explicitly includes 'access to or use of any premises or other property in terms of a rental' (our emphasis). The argument that movable property provided through rental is a service is marginally stronger, given the reference to 'other property' in the definition of 'services' whereas the definition of 'goods' is silent on the issue.

This ambiguity should really be addressed by the legislature.

As stated above, section 48 gives consumers a right to pay a fair price and so the rental can be challenged on that basis.

 It should also be noted that the CPA applies concurrently with the Rental Housing Act and that where they overlap, the provision that provides greater protection for the consumer takes precedence.

Section 23 on disclosure of the price of goods or services is relevant to the element of rental.

Section 48 also gives the lessee the right to rent at a fair price and on fair terms.

 The Formalities of a valid lease

 As noted above, several sections in the CPA create formalities requirements.

The most important ones are section 49 on prominence requirements for certain types of clauses, and section 50 read with section 22 (which requires plain language for written agreements).

 Duties of lessor

Section 54 deals with the right to demand quality services and so is relevant to the lessor’s duty to deliver and maintain the leased premises/property in a proper condition.

Similarly, this section is relevant to the lessor’s duty of ensuring undisturbed use and enjoyment during the lease period.

 Duties of lessee

 It should be noted that in a fixed-term lease agreement with a consumer who is a natural person, the lessor may not include a cancellation clause after breach of contract which gives the lessee an ultimatum with fewer than 20 business days to remedy the breach.

Termination of obligations

 The termination of fixed-term lease agreements is affected in various ways by section 14; which we have discussed in previous blogs

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. and we will respond to your legal queries within 48 hours.

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 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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