Common pitfalls with Leases

Experience has shown that many leases are not in order. The end result is that when the time comes to enforce the lease, the door is open for technical defences which can result in more complex litigation. Prevention is definitely less costly than cure as far as litigation is concerned.

It is also very important if you are in the business of leasing various properties on a large scale that the Consumer Protection Act (CPA) is complied with to the extent that it is applicable.  Furthermore, with residential property the Rental Housing Act, soon to be amended, must also be complied with. Most persons who are not lawyers and do not have the experience with drafting contracts are not normally in the best position to be drafting leases based on their own interpretation of the law.

Apart from the legislation that governs leasing premises, here are some useful practical guidelines that the prudent landlord would ensure leases comply with:

  1. The monthly rental amount should be separate to additional charges, electricity, water and penalties or other miscellaneous charges;
  2. Invoices must be accurate and detail all the costs in a clear understandable manner. We suggest that itemised billing broken down into categories detailed in point 1 above;
  3. Ensure that 20 business days’ notice is given to terminate a lease on notice (this is in terms of the CPA, however you need to check whether the Act applies taking into account the nature of the lease);
  4. Ensure that the time periods under the CPA and the Rental Housing Act are complied with, where applicable;
  5. Renewal clauses including options must be clear and unambiguous, and escalations must be clear, such clauses must also not be written with a bias toward the landlord;
  6. Always diarise dates by which tenants are to receive notice of certain events such as renewals or terminations;
  7. Clearly specify procedures in respect of inspection of the premises;
  8. Clearly specify how the premises are to be re-instated;
  9. Always make a defects list upon a handover of the premises;
  10. Ensure that addendums are correctly aligned with the terms of the leases to which they relate;
  11. Suretyships must be correctly signed.
  12. If the premises change it must be noted correctly in a properly signed addendum which reflects the new premises and complied with the lease. This is common in office blocks and malls where tenants may be shifted around. The domicillium clause must also be amended if this affects same.