Commercial LawGeneral IssuesLease Agreements

Lease Agreements points to consider

By 26/08/2013 June 9th, 2021 No Comments

Almost every person has entered into a lease agreement at some point in their lives, but most people are unaware of the consequences associated with a lease when they enter into the actual agreement.

It is a harsh reality that lease agreements tend to favour and protect the Landlord rather than the tenant. If you are a potential tenant looking to lease a property, there are a number of issues that should be considered and addressed before the lease agreement is signed:

  1. The duration of the lease. If a lease agreement is concluded for a period of 2 years (for example), and you as the lessee wish to terminate the lease before the lease period expires, a cancellation fee will most likely be levied against you. At the Landlords discretion, the fee will be between 50{bb7c59228909ee3c635bb54164678f79c6c2320af74994b444cd69be7e87e9c7} and 80{bb7c59228909ee3c635bb54164678f79c6c2320af74994b444cd69be7e87e9c7} of the remaining rental amount in terms of the existing lease agreement. However, in an ideal world a lease agreement will stipulate that the lease can be terminated on 1 month notice without any cancellation fee;
  2. The “total’ monthly rental. Although worded this way, total does not actually mean the total amount of the rental. A tenant must beware of signing a lease which contains clauses binding themselves to additional charges such as water and lights, rates and taxes, levies, special levies, rubbish removal, municipal rates, parking costs, air conditioning, security costs, insurance, suretyships, etc. these charges go over and above the basic rental amount. It is always wise to clarify the actual costs that a tenant will be liable for before entering into a lease agreement as most of the costs mentioned above will not be apparent in the lease agreement. If these hidden costs are not clarified beforehand, a tenant could be surprised when receiving a statement for R 7 500 when expecting to receive an account for R 5 000. This could also lead to arrears or defaults in payments;
  3. The leased premises. Before signing the lease agreement, a tenant should ensure that a thorough assessment of the premises is completed as there are often defects which may not be noticed at first glance. Any defects will become the tenants problem once the lease has been signed. A standard lease agreement normally gives a lessee/tenant 14 days from signature of the lease agreement to notify the Landlord of any defects. The landlord is then obliged to rectify these defects. Take note that lease agreements will also stipulate that any mechanical equipment on the leased property must be maintained, replaced, or repaired at the tenants cost. Beware of potential defects in equipment and ensure all appliances or fixtures are in working order while you have the opportunity to do so;
  4. Interruption of use. What this means is that should there be a break in any services (electricity, water, airconditioning, etc.) the tenant will not be able to withhold rental or have any claim against the Landlord, even if there has been fault on the part of the Landlord would led to the interruption. A tenant should always communicate with the Landlord on a regular basis to ensure that all issues or potential issues are ventilated before becoming too serious;
  5. Debit order. Any agreement where payment of money is involved and which contains a clause stipulating that payment will be effected by way of a debit order is dangerous. If a person consents to payment via debit order that person is putting themselves in a very vulnerable position in which their bank account will possibly be exposed to extensive debiting, especially in terms of a lease agreement with hidden costs. Advice would be to pay on demand or set up a debit order for a fixed monthly amount and nothing exceeding that amount;
  6. No Claim clause. This is one of the most important clauses in a lease agreement which must be read and understood completely. A no claim clause is a direct protection of the landlord for any actions which lead to damages, injury, loss of profit, or otherwise, on the part of the tenant. This clause will protect the Landlord even in instances where the loss or injury suffered by the tenant was due to the Landlords negligence. A tenant should always read this clause and if possible, negotiate with the Landlord to place some liability on him in some or other way.

With the above in mind, be sure to read and understand each and every clause of a lease agreement before signing. A lease agreement or any agreement for that matter is not water tight and can be amended or negotiated upon. Any issues you may have should be raised sooner rather than later. If you are not sure about anything contained in an agreement, consult an Attorney to assist you.

Warren Sundstrom

Ian Mc Laren

Ian Mc Laren

Ian McLaren BA LLB (WITS) General Educated St Johns College, Houghton. BA LLB University of the Witwatersrand 1984 Founded McLarens Attorneys September 1986. Right of Appearance High Court, October 1996. Expertise Litigation, Labour Law, Commercial Law, Family Law, Pension and Provident Funds, Customs and Excise, Wills, Deceased Estates, Trusts, Commercial Agreements, Reviewing and Drafting Government Legislation, Information Technology. Committees/ Trusts Law Society of South Africa Information Technology Committee. Trustee Verney College Educational Trust Other Transvaal Provincial colours for Practical Shooting. Third degree Black Belt JKS Karate. Photographer and motor cyclist Lectured for Continuing Legal Education on Information Technology issues.