Real Estate Investor Magazine South Africa July 2015 | Page 51

LEGAL

What Are Your Rights In

The Retail Industry?
Your rights and obligations
as a tenant or landlord
BY JOOS ENGELBRECHT

T

he South African retail industry has seen
significant growth with an increase in the
number of shopping centres spreading rapidly
countrywide. However, with careful consideration of
the risks and economic pressures, it is an opportune
time for potential business owners, entrepreneurs and
real estate investors to enter the retail market.
When looking to rent space, it is important for
tenants to ensure they fully understand their business
and their rights. This is equally important for the
landlord and property management company in order
to determine whether or not the tenant’s business will
be prosperous in the centre. Understanding the needs
of the business and knowing the target market is the
key to strategically positioning the business in the
right location within the centre. Once this has been
established, the tenant will be able to ascertain if the
rental is achievable.
The most important objective for the landlord is to
ensure a strong tenant mix. Whether you are renting
a single space or tenanting an entire centre, it is
imperative to screen tenants and ensure they are able to
meet the obligations of the agreement. This is achieved
by doing credit checks of the signatories and sureties.
The minimum essential clauses of the agreement
are another important aspect to bear in mind when
signing a lease agreement. This includes the parties to
the agreement, premises description, lease term, rental,
escalation rate, usage clause and the residence of the
parties. The micro and macro-economic climate plays a
critical role as economic downturn or economic growth
brings different benefits and risks for both parties.
The Financial Intelligence Centre Act (FICA)
has been a considerable advancement in property
management as it establishes control in terms of
the chosen tenant, which did not exist prior to the
Act being promulgated. The purpose of FICA is to
verify the identity of any natural-juristic person or
trust which is supported by recorded details of the
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client’s profile. FICA implicates both the [