LEGAL
Day Zero for Rental Market
Landlords take note
BY CILNA STEYN
W
ith the Western Cape’ s Day Zero fast approaching, the rental market is left with some uncertainty regarding the legal position of landlords and tenants affected by this crisis. Would landlords be required to provide water to tenants? Would tenants be required to maintain a property including gardens, drains and the likes without water available to them?
A severe drought like this, is in terms of South African Common Law, Vis Major or an Act of God. South African Common Law is based upon Roman Dutch Law, which is shaped and refined in our Courts by case law. The principle of Vis Major( Act of God) indemnifies parties against claims by one another for damages suffered as a result of an Act of God. This principle will always find application in lease agreements.
In rental agreements where no written lease agreement was concluded, in other words a verbal or tacit lease agreement, this principle will automatically contain this protection for both parties. The drought would not allow the tenant the opportunity to cancel the lease agreement or claim damages from the landlord or due to failure to supply water to the premises. The same principal applies to the landlord, this will mean that a landlord will not be allowed to cancel the lease agreement, have a tenant vacate or not allow a tenant to take occupation of a premises because of the drought.
In the majority of written lease agreements, this principle will be dealt with at length. The typical lease agreement will clearly indicate that no Act of God can give rise to a claim against either party. This would have the effect that the tenant would not have the right to cancel the lease agreement because of the landlord’ s inability to supply water due to drought. An example of this would be a tenant deciding to cancel a lease agreement in Cape Town in order to relocate. If, however the lease agreement is governed by the Consumer Protection Act( CPA) the tenant would in any event be entitled to cancel the lease agreement with 20 business days’ notice and then only face the reasonable cancellation penalty, as contemplated in the CPA. The drought would not give the tenant grounds to cancel the lease agreement, without penalty.
In terms of a lease agreement the landlord has an obligation to provide the tenant with undisturbed use and enjoyment of the premises, water supply to a premises is incidental to occupation, for this reason the landlord would never be allowed to limit water supply to a premises. However, in a case like this where the reason for not supplying water is a result of an Act of God the landlord cannot be held responsible for the lack of supplying the service. It is essential to carefully consider the terms of the lease agreement regarding this aspect and not make any assumptions.
This position is simple enough in lease agreements where the tenant pays utilities billed separately, as this would simply mean that the amount billed by the municipality for water would be less, as the water consumption is less due to the drought- as such not affecting either party in that regard in any way. However, a landlord is not entitled to receiving payment for a service that is not supplied.
This would be the position where a lease agreement provides that water and electricity forms part of the rental payable and not metered separately. If the amount paid to the landlord can clearly be quantified for the portion of water supply, that amount should be reduced to reflect the true water consumption by the tenant. If the amount that is paid for water consumption, cannot clearly be quantified, but simply forms part of the rental amount this could lead to disputes that could run into very costly and time-consuming litigation.
In the face of a natural disaster, as currently present in Cape Town, the principals of fairness and equity would prevail above all else. In cases where water is included in the rental and cannot be quantified specifically, the suggestion would definitely be for the landlord and the tenant to consider this, have a meaningful conversation regarding this and find an amicable solution that would be fair to both parties.
Neither one of the parties can rely on a damages claim, as the other party would definitely have the defence of Vis Major and could lead to thousands of unnecessary court or tribunal cases creating undue pressure on the legal system.
30 MARCH 2018 SA Real Estate Investor Magazine