What are your rights if land­lord sells?

Lesotho Times - - Scrutator -

WITH the mar­ket cur­rently favour­ing sell­ers, it may be tempt­ing for those who own a rental prop­erty to put the prop­erty up for sale. But what hap­pens if the prop­erty is oc­cu­pied by a ten­ant? Does the ten­ant have any rights, and are they within their rights to breach the lease agree­ment in this in­stance?

Ten­ants have to read through the lease agree­ment to fa­mil­iarise them­selves with their rights and obligations should the prop­erty be sold.

Ac­cord­ing to Adrian Goslett, CEO of RE/ MAX of South­ern Africa, the law states that a land­lord is within their rights to sell their prop­erty to a third party, even if the prop­erty is be­ing let out to a ten­ant and a lease agree­ment is in place.

How­ever, in terms of the legal prin­ci­ple ‘huur gaat voor koop’, the lease pre­cedes the sale, and there­fore the ten­ant is en­ti­tled to re­tain oc­cu­pa­tion of the prop­erty for the re­main­der of the lease pe­riod.

Mr Goslett says although a ten­ant has the right to stay in the prop­erty for the re­main­der of the lease pe­riod, there could be some anx­i­ety around the sit­u­a­tion, es­pe­cially if it means deal­ing with an­other land­lord or the re­newal of terms with the new owner of the prop­erty.

He says much is also de­pen­dent on the new owner’s plans for the prop­erty. He or she may be in­tent on keep­ing it as a rental prop­erty or may want to move into the prop­erty them­selves, which means they will not be will­ing to re­new the lease agree­ment once the term has ex­pired, he ex­plains.

in cer­tain cases, the ten­ant may feel they would be more com­fort­able with find­ing al­ter­na­tive means of ac­com­mo­da­tion as soon as they can. How­ever, if there is still quite a bit of time left on the lease, they could run into a few com­pli­ca­tions.

“if the ten­ant de­cides that they want to cancel their lease and move out, their right to do so will largely be determined by the lease agree­ment they signed and cur­rent leg­is­la­tion.”

Ten­ants will have to read through the lease agree­ment to fa­mil­iarise them­selves with their rights and obligations should the prop­erty be sold.

in some cases, he says land­lords and ten­ants may have agreed to a lease with a sales pro­vi­sion in or­der to give both par­ties flex­i­bil­ity should the sit­u­a­tion arise.

Mr Goslett says in some in­stances, the con­tract may stip­u­late that the ten­ant is within their rights to cancel the lease agree­ment and find other ac­com­mo­da­tion should the prop­erty be placed on the mar­ket.

Pro­vided the agree­ment makes pro­vi­sion within the terms and there is a mu­tual agree­ment be­tween the two par­ties, the ten­ant can be ab­solved of any penal­ties that could arise from the con­tract be­ing bro­ken, he says.

if the is­sue of the prop­erty be­ing sold has not specif­i­cally been ad­dressed in the lease agree­ment, it will be a lot more dif­fi­cult for the ten­ant to break the agree­ment with­out suf­fer­ing the con­se­quences of a penalty, he says.

He ex­plains that it is im­por­tant for ten­ants to re­mem­ber that the lease agree­ment will not au­to­mat­i­cally fall away once the new owner of the prop­erty takes trans­fer of own­er­ship.

if it has not been can­celled, he says all terms and con­di­tions of the lease agree­ment will be car­ried over to the new own­ers of the prop­erty.

The lease will re­main in full ef­fect un­der the new land­lord, and both par­ties will be legally ob­li­gated to up­hold the stip­u­lated terms of the agree­ment.

if the new owner has bought the prop­erty as a rental prop­erty, they will be more likely to want the ten­ant to re­main on the prop­erty and will be less agree­able to re­leas­ing them from the con­tract, he says.

in terms of the Con­sumer Pro­tec­tion Act (CPA), there is no al­lowance for the early ter­mi­na­tion of a fixed term con­tract within the fixed term, on the con­di­tion that the new owner is a sup­plier who lets prop­erty in the or­di­nary course of his busi­ness.

This is reg­u­lated by sec­tion 14 of the Act. The ten­ant will be en­ti­tled to give a 20 busi­ness day no­tice pe­riod dur­ing the term of the lease if the new owner lets prop­erty in their or­di­nary course of busi­ness.

How­ever, in this case, the ten­ant would be li­able for the no­tice month and pos­si­bly a rea­son­able penalty fee.

The CPA will not ap­ply in the in­stance where both par­ties in the lease agree­ment are ju­ris­tic per­sons.

if a ten­ant is think­ing about can­celling their lease be­fore it has ex­pired at any stage dur­ing the process, they should first dis­cuss it with their land­lord, he says.

“Talk­ing the mat­ter through and be­ing on the same page will help to avoid com­pli­ca­tions and al­le­vi­ate some con­cern as lit­tle may need to change af­ter the prop­erty has been sold.”

— Prop­erty24

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