There are many reasons why a lease might be cancelled early. Whatever the reasons, all are subject to the Consumer Protection Act (CPA) and the Rental Housing Act (RHA), and both fall under the South African law. Let us examine the reasons and the implications involved.
Cancellation of lease before the lease agreement expiry date
The tenant or the landlord may cancel the lease agreement early, providing the cancellation complies with both the CPA and the RHA. Tenants terminate their lease agreements early for many reasons. It could be due to a death in the family, health problems, retrenchment, relocation or emigration, to name but a few. But whatever the reason, the cancellation is permissible providing both parties agree. This is made easier if the tenant and the landlord have included a cancellation clause in the lease agreement, which allows for early termination based on acceptable terms. If, however, there is no clause contained in the lease, or the two parties are not in full agreement, then the CPA or RHA statute will apply.
The CPA allows for cancellation at any time, providing 20 working days’ notice is given. In this case, the landlord has the right to charge a cancellation fee to recoup his losses. This fee should be agreed upon in the lease agreement.
Should a tenant cancel their lease agreement before the expiry date, most reputable letting agents will adhere to Section 14 of the CPA. Provision for this should be in their lease agreement. This states that the landlord is within his/her rights to claim a cancellation penalty equal to two months’ rent, if the cancellation is submitted with more than six months of the lease still remaining. Should less than six months remain, the landlord may claim a one month cancellation penalty. Once cancellation is finalised, the tenant should leave the premises in a condition acceptable to the landlord.
Should the tenant vacate the property without giving prior sufficient notice (generally 20 working days or as stipulated in the lease agreement), this then becomes a breach of contract, and the landlord retains all rights pertaining to this, and as compensation for the loss the landlord experiences due to loss of income until a replacement tenant is found, he or she has the right to withhold the tenant’s deposit to recuperate losses.
Cancellation of lease agreement due to breach of contract
A landlord may terminate a lease at any time if the tenant is in breach of contract, providing the grounds for termination do not constitute unfair practice. In these cases, the landlord is required to give the tenant at least 20 days to sort the problem out, depending on the severity of the breach. Should the problem remain unresolved, the landlord may terminate the contract. These breaches more often than not occur as a result of the tenant defaulting by failing to pay full rent every month, exhibiting continuous obnoxious or unacceptable behaviour towards neighbours, causing intentional malicious damage to the property, or performing dangerous or life-threatening behaviour within the property. In such cases, the Consumer Protection Act allows for the landlord to claim a reasonable cancellation penalty from the tenant. The CPA provides guidelines in Regulation 5 on how to go about this, which takes into account the length of notice given and the time it would take to replace the vacating tenant.
It is important to note that the landlord has no right to forcefully evict the tenant, change the locks, or disconnect the lights and water. If the landlord terminates the lease, he has no right to repossess the property if the tenant is not in agreement. In these instances he has to obtain a court order. In other words, a landlord may not evict a tenant illegally.
In closing, it must be borne in mind: the tenant also has the right to terminate the lease agreement if they feel the landlord has failed in his duties by not maintaining and keeping the premises in a safe and fit place to live in. As in the case of the tenant being given time to remedy a problem, the landlord would also be given a specified time to handle a problem. Failing to do so timeously would result in a breach on his part, which would allow the tenant the right to terminate the lease and, if necessary, claim damages.