Category

Lease Agreement

Sep 08
0

Reimbursement for property improvements?

By | Lease Agreement, Rental Housing Act, Tenants

Don’t rely on oral agreements

It is not uncommon for long-term tenants to make improvements to a rental property using their own resources. After all, it is their home and the project they want to undertake may not have any obvious benefit to the property owner. Therefore, it may not be reasonable to expect the landlord to fund the improvements, in sharp contrast to essential repairs. But what expectations does this create? Can the tenant reasonably expect to be reimbursed for their financial outlay? Does their investment in the property give them an advantage if the owner eventually decides to sell? These questions were put to the test in a recent case, which provides lessons for both landlords and tenants.

The case

The dispute arose after a tenant had leased a property for over 15 years and made extensive improvements. The tenant claimed there was an oral agreement giving them a right of first refusal to buy the property, which justified the investment in repairs and renovations. When the tenant fell into rental arrears exceeding R1 million and was evicted, they counterclaimed for reimbursement of c. R900,000, alleging both breach of an oral right of first refusal and unjust enrichment. Unjust enrichment is a legal concept that means one person has unfairly benefited at the expense of another, and it would be wrong for them to keep that benefit without compensating the other person. However, for a claim of unjust enrichment to be successful, the tenant must demonstrate that certain legal criteria were met.

The landlord denied any such agreement existed and relied on clear lease provisions which stated no compensation would be paid for improvements, regardless of consent.

The property was eventually sold for R3 million, and the landlord claimed outstanding rent adjusted for prescription. This means that the landlord asked for unpaid rent, which the court adjusted because of a legal principle that limits the time period in which a claim can be made. The landlord was only entitled to the rent that was still legally collectible, taking into account any relevant time limits.

Court findings

Unfortunately for the tenant, the court did not find in their favour, citing several reasons. Their case might have been different had they not fallen into severe rental arrears. But the court found no enforceable right of first refusal. There was no written agreement granting the tenant a right of first refusal. Any oral agreement was unenforceable because the lease required amendments to be in writing and signed by both parties.

The rent increases the tenant had endured were lawful. The lease included a 10% escalation clause every two years. The rent increase from R22,000 to R28,000 in December 2017 was lawful and reasonable under the Rental Housing Act, according to the court. Furthermore, no compensation was deemed appropriate for improvements the tenant made to the property. Clause 12 of the lease explicitly barred compensation for improvements made by the tenant, whether or not the landlord consented. The tenant’s claim for reimbursement was therefore dismissed.

Lastly, their claim for unjust enrichment was rejected. In this case the tenant failed to frame their claim under one of the recognised legal enrichment grounds. The lease explicitly stated that no compensation would be paid for improvements, removing a critical component of legal justification. The court emphasised that unjust enrichment claims must meet strict legal criteria. The tenant’s removal of improvements also weakened their claim. The tenant had removed several enhancements upon vacating, and no joint inspection was conducted. The property was deemed to be in good repair, further undermining  the claim.

Practical takeaways for tenants and landlords

While the case had an unsatisfactory outcome for the tenant, it offers important lessons for all parties in a rental housing situation. Most importantly, get agreements in writing! While verbal or oral leases were once legally acceptable, the Rental Housing Amendment Act 35 of 2014 introduced the requirement for a written lease. If you want a right of first refusal or compensation for improvements, ensure these are clearly documented in a written lease amendment signed by both parties. Make sure you understand your lease, whether you are landlord or tenant. Read the lease terms carefully, especially clauses on rent escalation and improvements. Don’t make or ask for oral promises, which are difficult to enforce.

If you are the tenant, seek consent before making improvements. If you are the property owner, make it clear that, while you may not oppose a reasonable enhancement to the property as long as it is not a structural alteration, you want to be informed and give consent to any plans the tenant may have. 

Tenants should ask for written consent before spending money on renovations and clarify whether they will be reimbursed. Equally, landlords should maintain thorough records of lease terms, communications and any inspections to protect everyone’s interests. Finally, regular, clear communication about lease terms and property conditions will prevent disputes and potentially costly legal battles.

For further information

SD Law can answer your questions about rental housing rights and advise you on clear lease terms in landlord–tenant relationships, especially regarding improvements and rent increases. Contact one of our attorneys on 086 099 5146 or simon@sdlaw.co.za. Simon Dippenaar & Associates, Inc. is a law firm of specialist property lawyers in Cape Town, Johannesburg and Durban working hard to help landlords and tenants maintain healthy working relationships.

Apr 02
0
Commercial lease

Misrepresentation in commercial contracts (including your lease)

By | Lease Agreement

What to do if you’ve been led up the garden path

Before any contract is signed, there are usually discussions about the arrangement or agreement being made between two parties. The purpose of the contract is to capture the details and formalise them, so everyone understands their responsibilities and expectations. Signing the contract is often seen as a formality, especially if the negotiations have been amicable and the two parties seem to have a good rapport. For that reason, it may not be scrutinised as carefully as it should be. What happens if you have an understanding about the conditions of a contract, for example a lease, and you later discover the terms you thought applied are not actually included in the contract?

For example, perhaps you enter into a lease agreement believing the furniture is included in the rental amount. After six months, the landlord demands the furniture back. You assume you are covered by the lease agreement but, when you review it, you realise there is no explicit clause confirming the inclusion of the furniture. What can you do?

False or misleading statements

The lease is not the watertight “get out of jail card” the landlord may think it is. A landlord may not rely on a lease clause limiting their liability for representations if they have made false or misleading statements to a prospective tenant before entering into a lease. This is known as misrepresentation. Whether fraudulent, negligent or innocent, misrepresentation arises when a party has been tempted or lured into entering into a contract by the other party’s misrepresentation of facts. If your initial discussions led you to believe the furniture was included in the rental, the landlord is guilty of misrepresenting the reality. However, it’s equally possible that you misunderstood the landlord, who was in fact acting in good faith.

The primary issue is the disparity between the written lease agreement and the actual intentions of the parties. Determining the true intentions can be murky and requires looking beyond the written agreement to the actions of the parties. 

Material misrepresentation

To pursue a claim for damages, you must establish that misrepresentations were made when you entered into the lease agreement. In contract law, honesty and transparency are critical principles. A key concept in contractual agreements is “material misrepresentation”. Misrepresentation is defined in law as “an untrue statement of representation concerning an existing fact or state of affairs which is made by one party to the contract with the aim, and result, of inducing the other party into concluding the contract.” The misrepresentation may be about the qualities or characteristics of the subject of the contract.

Misrepresentation may render a contract voidable if: 

  • A misrepresentation has been made
  • The misrepresentation was made by one contracting party to another
  • The misrepresentation was unlawful
  • The misrepresentation induced the parties to enter into the contract

Types of misrepresentation

There are three types of misrepresentation: 

  • Intentional misrepresentation – a person makes a statement, which is known to be false and without regard for whether it is true or not, with the intent to deceive. The deceived party may claim damages and decide whether or not to uphold or rescind the contract
  • Negligent misrepresentation – a person makes a statement they believe to be true but they fail to exercise reasonable care or competence to communicate information that is true or correct. The party aggrieved party may have a claim for damages or may choose to rescind the contract
  • Innocent misrepresentation – a person makes a statement neither fraudulently or negligently. In these circumstances the aggrieved party will not have a claim for damages but may have the choice to uphold or rescind the contract

Remedial action 

Someone who has been misled into contracting by the misrepresentation of the other party, as in the example of the lease and the furniture, has a number of options to remedy the situation: 

  • They may seek to have the contract rescinded or set aside, essentially undoing the agreement and returning the parties to the position they were in before the contract was entered into. In the case of a lease agreement where the tenant has taken occupancy of the property and it is their home, this could be tricky.
  • Where the innocent party suffered financial loss due to the misrepresentation, they may seek monetary compensation from the party responsible for the misrepresentation. In our example, there may not be a literal financial loss, but it could be argued that returning the furniture would place the tenant in the position of having to make a financial outlay to replace it, and monetary compensation may be helpful.
  • In cases where damages are inadequate, the court may order specific actions, compelling the party responsible for the misrepresentation to fulfill their contractual obligations as originally agreed upon. In our example, this would mean leaving the furniture in the property for use by the tenant (which would probably be the simplest and most effective solution).

Burden of proof

For a misrepresentation claim to succeed, the following elements must be proven: 

  • The statement or conduct of the one party was false and was made either intentionally or negligently
  • The misrepresentation induced the other party into entering into the agreement
  • The misrepresented fact was significant enough that it influenced the innocent party’s decision to enter the contract
  • The innocent party reasonably relied on the misrepresentation when entering into the contract

In our example, it would be necessary to establish the true intentions of the parties upon entering into the lease agreement. If it could be established that the true intention was to provide the furniture and the landlord is now refusing to do so, there could be a possible claim of misrepresentation. 

For further information

We’ve used this simple example to illustrate the concept of misrepresentation and what to do about it. In our experience, misrepresentation can happen by either landlord or tenant. It is also a salient reminder to scrutinise a lease agreement or any contract before signing it! 

Simon Dippenaar & Associates, Inc. is a law firm of specialist eviction lawyers in Cape Town, Johannesburg and Durban. We help landlords and tenants maintain healthy working relationships. If you think you are a victim of misrepresentation and you are disadvantaged or distressed by it, contact one of our attorneys on 086 099 5146 or simon@sdlaw.co.za for a confidential discussion today. We’ll help you put things right.

Further reading:

Jul 10
1
Rights responsibilities in rental housing

Tenants’ rights and landlords’ responsibilities

By | Eviction notice, Evictions, Lease Agreement, PIE, Rental Housing Act

What South African law says about eviction

The relationship between property owner and occupier should be a happy one. After all, it offers a reciprocal and mutual benefit. One earns a passive income from an owned asset, and the other enjoys a home to live in, without the weight of responsibility that come with property ownership. Unfortunately, the relationship is not always friendly. Friction can emerge as a result of unpleasant behaviour by either party. Landlords can be unresponsive or unreasonable. Tenants can be disrespectful or negligent. South African law contains multiple pieces of legislation governing rental housing, and both landlords and tenants are accorded rights that protect them. They are also assigned responsibilities they must uphold. But the balance tends to lean towards tenants’ rights and landlords’ responsibilities. In this article we examine them both.

Learn more: read our Complete 2025 Guide to Evictions in South Africa.

Understanding tenant’s rights

The South African Constitution gives people certain inalienable rights. How do they apply to tenants?

Right to fair treatment in law

A landlord cannot evict a tenant without going through the correct legal procedures. Unfortunately, some landlords take it upon themselves to involve municipal law enforcement to evict tenants. The Prevention of Illegal Eviction from and Unlawful Occupation of Land Act No 19 of 1998 (PIE) is a key piece of legislation in South Africa that regulates the process of eviction. It was enacted to protect both property owners and tenants, ensuring that evictions are carried out in a fair and lawful manner.

The courts take eviction law very seriously. Failure to follow the correct process could result in a heavy fine for the landlord, as well as damages payable to the tenant. In the worst case scenario, the landlord could end up in jail, facing serious criminal charges.

Right to adequate housing 

The Constitution recognises the right to adequate housing as a basic human right. No one’s property may be taken away from them and no one may be evicted from their home without a court order. This means a landlord must apply to court before evicting a tenant from their property.

The court must be satisfied that there is alternative accommodation available to the tenant before ordering the eviction. This can be state housing, as the state has a duty to provide housing to all its citizens. If the tenant has occupied the property for over six months, PIE does not allow the tenant to be evicted without having first secured alternative accommodation.

Right to legal representation

The law gives a tenant the right to defend against an illegal eviction if a landlord forces them to leave the premises without appropriate notice. Ownership does not give a landlord the right to evict a tenant without following the correct procedure.

Tenants have the right to legal representation during the eviction process. If a tenant cannot afford a lawyer, they can seek assistance from Legal Aid South Africa or a pro bono attorney. Further information regarding Legal Aid is available online or from the Registrar of the High Court.

Understanding landlord responsibilities

Landlords have a set of responsibilities towards their tenants. Legislation is motivated in part by past abuses and rental housing law ensures tenants cannot be exploited or unfairly treated.

General obligations

The landlord has the responsibility to:

  • Deliver the property to the tenant for their use and enjoyment. The landlord must provide everything necessary for the tenant to use and enjoy the property, for example, keys, remotes, etc. 
  • Maintain the property in good order and condition for the duration of the lease agreement. Correspondingly, the tenant should report any defects in the property to the landlord.
  • Ensure the tenant’s undisturbed use and enjoyment of the property, i.e., the tenant’s privacy.

Following legal procedures

The PIE Act clearly defines the procedure the landlord must follow to evict a tenant. A property owner must not take the law into their own hands, for example by cutting the electricity or water supply to the property or intimidating the unlawful occupier into vacating the property. A landlord can only consider eviction in the event of a breach of the lease agreement which the tenant has failed to rectify. If the lease is coming to its natural end and the landlord does not wish to renew it, they simply give the tenant notice to quit per the terms of the lease agreement. This is not eviction. However, if the tenant breaches the agreement, the steps in the eviction procedure are:

1. Notify the tenant of the breach.

  • The landlord must issue a warning to the tenant in writing, giving them a specified amount of time to remedy the breach. This time frame is determined by the terms of the lease. Unless otherwise specified, it is 20 working days, in accordance with the Consumer Protection Act (CPA). The CPA is designed to protect consumers in various transactions, including rental agreements. It sets out specific requirements for notice periods and other aspects of the landlord–tenant relationship. If there is no written lease, the landlord must give a full calendar month’s notice. If the tenant rectifies the breach, the matter is finished.
  • If the breach is not remedied within the designated time, the landlord notifies the occupier in writing that the lease is to be cancelled and gives the occupier reasonable time to vacate the property.
  • The notice period required to cancel the lease, like the time allowed to remedy the breach, is dictated by the lease. If no time frame is stipulated, or in the case of a verbal lease, a minimum of one calendar month’s notice is required (end of the current month to the end of the following month).

2. Apply for a court order.

  • If the occupier fails or refuses to vacate the property, despite being given adequate notice, the landlord may approach the court to start the eviction procedure.
  • The court provides the landlord with a date and time for the eviction hearing.

3. Serve notice on the tenant 

  • Written notice of the eviction hearing must be personally served on the unlawful occupier of the property, as well as on the local municipality. 
  • This notice must be served by the sheriff at least 14 business days before the eviction hearing in court. 
  • The notice must indicate the date and time of the eviction hearing, the circumstances surrounding the eviction, and the unlawful occupier’s right defend themselves.

4. The hearing. 

  • At the eviction hearing the court will hear the matter and make a decision whether or not to grant the eviction order. The occupier may defend the eviction. The court will consider factors such as children, elderly or disabled tenants, and woman-headed households, and the availability of suitable alternative accommodation when granting the eviction order. In certain circumstances an order may be granted but “stayed” – delayed – to give the occupier more time to find another home.

Respecting tenant’s rights

Landlords must respect the rights of tenants during the eviction process. Harassment or intimidation of tenants is not permitted.

The landlord is not allowed to enter the tenant’s premises or remove doors to speed up the eviction process. The provisions of the Rental Housing Act are clear on the rights of tenants. The tenant’s rights include the right not to have:

  • Their person or home searched
  • Their property searched
  • Their possessions seized, except by court order

Balancing rights and responsibilities

Evictions are complex processes that require a careful balance between the rights of tenants and the responsibilities of landlords. It is also important to be mindful of ethical considerations, as South Africa has an acute housing shortage at present and a fragile economy. It is always better to try to resolve disputes through negotiation and, if necessary, mediation. Seeking an eviction order through the courts should be the last resort. 

Learn more: read our Complete 2025 Guide to Evictions in South Africa.

For further information

Simon Dippenaar & Associates, Inc. is a law firm of specialist eviction lawyers in Cape Town, Johannesburg and Durban. We help landlords and tenants maintain healthy working relationships. Contact one of our eviction attorneys on 086 099 5146 or simon@sdlaw.co.za if you need help with tenants’ rights or landlords’ responsibilities. 

Further reading: