contract of lease l.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Contract of Lease PowerPoint Presentation
Download Presentation
Contract of Lease

Loading in 2 Seconds...

play fullscreen
1 / 38

Contract of Lease - PowerPoint PPT Presentation


  • 870 Views
  • Uploaded on

Contract of Lease. Definition: A contract where one party (lessor) grants to another party (lessee) the temporary use and enjoyment of a thing in exchange for payment (rent) Elements (essential requirements): Temporary use and enjoyment of the property leased & duration of the lease

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Contract of Lease' - sana


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
contract of lease
Contract of Lease

Definition:

  • A contract where one party (lessor) grants to another party (lessee) the temporary use and enjoyment of a thing in exchange for payment (rent)

Elements (essential requirements):

  • Temporary use and enjoyment of the property leased & duration of the lease
  • The thing or property let
  • The rent payable
lease
Lease

Elements

  • Rent
  • Agreement to provide for payment of rent
  • must consist of a sum of money and be fixed (or incorporate a standard by which it can ascertained)
  • exception: rent may be in a form of produce from the property in agricultural leases
lease3
Lease

(b) Temporary use & enjoyment

  • Lessee temporarily acquires right to use & enjoy fruits of the property
  • Does not include lessee’s taking away substance of the property (alienating)

See Bozzone case p 170

lease4
Lease

(c) Duration of the lease

  • Time period has to be agreed upon bcs the use & enjoyment is temporary
  • It will last for the duration agreed by the parties or can be terminated by notice if so agreed
  • Failure to agree on duration: periodic lease

– weekly, daily, monthly etc

– can be terminated by a reasonable notice e.g monthly lease requires a month notice

lease5
Lease

(c) The property let

  • Can be movable or immovable
  • Must be identified or identifiable

Formalities

      • Generally no need for formalities except e.g:
        • Long lease (10 years or more)
        • Upon request by tenant
lease6
Lease

Statutory regulation of leases of dwellings (p 172-173)

Rental Housing Act

- Regulates the relationship between the lessors & lessees where the leased property is to be used as a dwelling

- also defines responsibility of government in the rental housing market

- Act also provides for the establishment of Rental Housing Tribunals

lease7
Lease

Duties of the parties to the lease agreement (initially, during the subsistence of the lease & termination)

  • Both parties incur duties upon conclusion of valid lease:
  • Commencement
  • Subsistence
  • Termination
lease8
Lease

Duties of the lessor

  • Delivery of occupation
  • Lessor must deliver the property including everything necessary for the due and proper enjoyment of the lessee at the agreed time & place
  • Absence of express agreement: within reasonable time
  • Long lease – delivery includes co-operation of the lessor in its registration
  • Breach of the duty entitles the lessee to remedies for breach of contract
  • May include claim for damages over & above other remedy
lease9
Lease
  • Delivery of occupation (CNTND)
  • The thing let must be delivered in a proper condition
  • Agreement silent on condition of the thing upon delivery:
  • Property to be delivered in the condition that it was at the time of agreement

Hunter v Cumnor Investments (p 176):

> Lessor obliged to handover leased property in a condition reasonably fit for the purpose which it is let & lessor remains liable throughout the term of the lease to maintain the premises in that condition

  • Failure: breach of contract
lease10
Lease

(b) The duty to afford beneficial use and enjoyment

  • The lessor has the duty to give the lessee the beneficial use and enjoyment of the property for the purpose for which it was let

> Lessor must not interfere or allow any interference with the lessee’s use of the property

NB Fourie v Potgietersrusse Stadstraad p 178 (grazing)

See NB other cases p 178 - 179

lease11
Lease

(b) The duty to afford beneficial use and enjoyment (CNTND)

  • The lessee will be entitled to a remission in rental if the use & enjoyment of the property is limited (Ntshiqa case p 179)
  • Note also s 4 of Rental Housing Act (privacy rights of the lessee: lease of dwellings)
  • No liability for the interference with use and enjoyment not attributable to lessor’s conduct
  • Lessor must ensure that the lessee is not evicted by someone with a superior title
lease12
Lease

Right of inspection & to attend to repairs

  • The lessor has a right to enter & inspect the leased property & to enter & do the necessary repairs to the property
  • The right of inspection must be exercised in a reasonable manner after reasonable notice (Rental Housing Act)
  • Necessary repairs which cannot be done while the lessee is in occupation > the lessee is required to leave the property for repairs to be done
  • Refusal by the lessee to vacate property (necessary repairs):

Lessee will be in breach & lessor may cancel the lease

lease13
Lease

Eviction by the owner

  • Where lessor is not the owner: Threat of eviction to the lessee by the owner of the property amounts to breach of lessor’s duty to afford undisturbed use & enjoyment of the property let
  • The lessee must inform the lessor of the threatened eviction
  • Why? For lessor to assist lessee in defending the eviction or for lessor to defend the eviction himself
  • Failure to assist by the lessor: lessee must defend eviction to the best of his ability
lease14
Lease

Eviction by the owner (CNTND)

  • Failure to inform the lessor or to defend threat of eviction by the lessee where it can be shown that he would not have been able to successfully defend the eviction because of lessor’s defective title: lessor will be in breach

Remedies for breach of duty to afford undisturbed use & enjoyment of property

  • Lessee may claim specific performance in the form of an interdict restraining lessor from disturbing lessee & or claim damages
  • Serious breach of a duty: lessee entitled to cancel & may claim damages
lease15
Lease

Remedies for breach of duty to afford undisturbed use & enjoyment of property (CNTND)

  • Breach not so serious or lessee elects not to cancel the lease > lessee would be entitled to a pro rata remission of rent proportionate to the diminished use & enjoyment of the property & may also claim for damages
lease16
Lease

(c) The duty keep the property in a condition reasonably fit for the purpose of the lease (property maintenance)

  • The lessor has the duty to:
    • to keep the property in a condition reasonably fit for the purpose for which it is let
    • may include attendance to structural flaws, dilapidations, etc. which prevent enjoyment
  • The lessor is not liable for damage to the property caused by the lessee’s negligence

NB see serious breach of this duty in The Treasure Chest v Tambuti Enterprises p 176-177

lease17
Lease

Remedies for breach of lessor’s duty to maintain property let

  • Lessee may cancel the lease if breach of duty is so serious that the lessee cannot be expected to continue with the lease (notification of state of disrepair important)
  • Breach not so serious or lessee elects not to cancel:

– lessee may claim reduction in rental proportionate to the reduced use & enjoyment caused by state of disrepair

lease18
Lease
  • Breach not so serious or lessee elects not to cancel: (CNTND)

– Lessee may repair & claim the cost of the repairs from the lessor or deduct the costs from rental due to the lessor

NB Harlin Properties v Los Angeles Hotel p 177

    • May claim damages for any consequential loss (foreseeable)
    • Duty to maintain property let usually modified or excluded by agreement between the parties
lease19
Lease
  • The duty to pay taxes
      • Unless provided otherwise in the agreement, the lessor is liable for all taxes and charges imposed by public bodies in respect of the property
      • Parties may agree as to who will pay taxes and other charges but this will not affect statutory liability
      • Lessee is liable for all consumption charges such as electricity and water
lease20
Lease

Duties of the Lessee

(a) The duty to pay rent

  • The lessee has the primary duty to pay rent in arrears unless agreed otherwise
  • Rent must be paid at the agreed time & place
  • Lack of agreed place: payment to be made where the lessor is located
  • Parties may also agree on the method of payment
  • Lessee may be in breach if fails to pay in accordance with the agreement
lease21
Lease

(a) The duty to pay rent (CNTND)

  • failure to pay rent or to pay in a correct manner may entitle lessor to:
    • Claim specific performance (rent) and any consequential damages
    • cancellation of the lease (non-payment)
  • Lessee must be given sufficient notice to remedy the breach
  • Cancellation: lessor to also apply for ejectment of the lessee
  • Lessee is entitled to refuse to pay rent if he is prevented from using the property by an exceptional, unforeseen and uncontrollable event e.g riot, flood,etc.
lease22
Lease

The landlord tacit hypothec

  • Lease of immovable property > lessor also has a tacit hypothec over the movable property of the lessee, sub-lesees & third parties on the leased property as security for payment of outstanding rent
  • Remedy automatically arises as soon as tenant is in arrears
  • Also terminates automatically as soon as rental is paid
  • Items covered by the hypothec include: see p 182
  • Perfecting the hypothec > landlord must attach the property by obtaining a court order which prevents the lessee from removing the property from the leased premises
lease23
Lease

The landlord tacit hypothec (cntnd)

  • Prevention by the lessor amounts to taking the law into one's hands

NB Frank v Van Zyl 183

lease24
Lease

(b) Duty of care & use the property for the purpose for which it was let

  • Lessee must exercise proper care which a reasonable person would in using his own property
  • Lessee must also use the property only for the purpose for which it is let

> Purpose not agreed: will be that which the property has been used for in the past or that which is clear from the property itself

  • Lessee must not cause a nuisance on the property

Burns v D and G (Pty) Ltd p 276 (Sharrock)

  • However, living an immoral life in private does not per se constitute misuse of the premises

Lomax v Killarney of Durban (Pty) Ltd p 276 (Sharrock)

lease25
Lease

(b) Duty of care & use the property for the purpose for which it was let (Cntnd)

  • Breach of duty including where lessor abandons the property let:
  • Lessee may be interdicted
  • Lease may be cancelled
  • Lessor may sue for damages (NB mitigation of losses in case of abandonment)
  • s 4 of the Rental Housing Act: makes provision for lessor to claim compensation for damage to the property caused by a tenant, member of tenant’s household or visitor
lease26
Lease

(c) The duty to restore the property to the lessor on termination of the lease

  • The lessee must, upon termination of the lease, return the property in the same condition as he received it
  • However, unless agreed otherwise, the lessee is not liable for:
    • reasonable wear and tear
    • damage to the property not caused through the fault of the lessee or members of his household or agents
lease27
Lease

(c)The duty to restore the property to the lessor on termination of the lease (Cntnd)

  • Failure to return the property on expiry of the lease or failure to return it in the same condition, lessor may claim:
    • an order of ejectment of the lessee and

– Damages or loss caused by the holding over (usually amount of rent) or specific performance with respect to repair of the property

lease28
Lease

(c)The duty to restore the property to the lessor on termination of the lease (Cntnd)

  • Prevention of Illegal Eviction and Unlawful Occupation of Land Act 19 of 1998
  • No one may be evicted from their home without an order of court made after considering all relevant circumstances
  • Ndlovu v Ngcobo (2002): Act also applies to lessees of residential property in arrears, holding over and in unlawful occupation
lease29
Lease

Renewal

  • A lease agreement is renewed if on termination of existing lease parties agree that it will continue
  • Renewal is not the continuation of old lease
  • Terms, duration and rental amount might be different
  • Parties may expressly renegotiate new terms or impliedly agree that the lease with continue on same terms
lease30
Lease

Effect of the lessor selling the leased property

  • In the event that the lessor: sells or donates the property or dies and ownership of the property changes during the subsistence of the lease:
  • The ‘huur gaat voor koop’ applies (hire goes before purchase)

– The successor steps into the shoes of the lessor

– The lessor’s rights and duties accrue to the successor

– The lessee remains bound by the lease despite the change of lessors

      • No new contract comes into existence (only substitution of the lessor)
lease31
Lease

Effect of the lessor selling the leased property (Cntnd)

Exceptions to the application of the rule:

  • This rule is not applicable to a lease of movable property and an expropriation of property by the state
  • Only applies to leases of land and buildings

Applies differently to short and long leases

  • Short lease, new owner will be bound by the lease if:
  • The new owner knew about the lease or
  • The lessee is in control of leased property (being in occupation himself or through an agent or sub-lessee) or
  • New owner is a gratuitous successor eg. property left to the new owner through a will
lease32
Lease

Effect of the lessor selling the leased property

  • Long lease, new owner will be bound if:
  • If new owner knew about lease being in place or
  • Lease has been registered or
  • New owner is a gratuitous successor eg property left to the new owner through a will
  • But new owner will be bound for the first ten years of the lease if lease has not been registered and the lessee is in control of the leased property
lease33
Lease

Sub-letting

  • A sub lease is a contract whereby the lessee lets the property to a third party (sub-tenant or sub-lessee)
  • It does not create a contract between the lessor and the third party
  • It is subject to the main lease

– if the former is defective, the latter will also be affected (sub-lease)

  • Determining whether the lessee is able to enter into a sub-lease (factors to consider)
  • type and character of property being let
  • whether the lease agreement requires consent of the lessor
lease34
Lease

Sub-letting

  • Usual practice: include clause limiting lessee’s power to sub-let or clause stating that lessor’s consent to sub-letting will not be unreasonably withheld
  • However allowing another person to occupy premises gratuitously is allowed
  • The lessee and sublessee incur same rights and obligations as lessor and lessee respectively
  • No relationship between original lessor and sublessee
  • Exception to the above: tacit hypothec
lease35
Lease

Improvements made by the lessee on the property let (movable property)

  • The lessee may remove useful and luxurious improvements made to the property provided it can be done without damaging the leased property
  • If improvements cannot be removed without damaging the property or lessee has not removed useful improvements at the end of the lease or improvements are necessary improvements:
  • Lessee may claim compensation from the lessor
lease36
Lease

Improvements made by the lessee on the property let (movable property) Cntnd

  • The amount claimable would be the increase in the value of the property or actual cost of improvement (whichever is the lesser)
  • Lessee has the right to retain possession of property until compensated
  • No compensation for luxurious improvements
  • Necessary improvement: one which is made to protect and preserve the leased property (may not be removed)
lease37
Lease

Improvements made by the lessee on the property let (movable property) Cntnd

  • Useful improvement: one which improves the property and increases the value but not needed for the protection and preservation of leased property
  • Luxurious improvement: one which is not necessary or useful but add to the value of leased property
lease38
Lease

Improvements made to immovable property

  • The lessee is entitled to compensation for improvements done with the permission of the owner (express or implied)
  • Lessee will get nothing if cannot remove improvements done without permission or cannot remove improvements without damage to property or chooses not to remove improvements
  • No right to retain property as security while waiting for payment of compensation
  • Confusion whether same principles apply to urban leases

Termination of lease agreement: see p 191