Real Estate Investor Magazine South Africa September 2015 | Page 29

LEGAL

Navigating Landlord -

Tenant Relationships
Early Cancellations of Leases
and how to deal with them
BY MICHAEL BAUER

I

f a tenant cancels his lease before the end date
of the contract, the landlord can decide to either
a) accept this cancellation or b) treat it as a
repudiation of the contract and claim for damages. If
the landlord decides to claim for damages, the tenant
is likely to lose his deposit but can also be sued for the
remainder of the rental due for the lease period.
The tenant is, however, able to receive his full deposit
refund (if there are no damages) and be released of any
claims of future rental if the landlord agrees to just
cancel the existing lease and finds a replacement tenant
immediately.

The penalties charged are
not to punish tenants for
early cancellation but rather
to protect the landlord.
While the Consumer Protection Act is often quoted
in cases of whether a landlord is able to claim the
full rental for the remainder of the lease, it has to be
remembered that although the tenant is given the
choice of terminating his lease, giving 20 working days’
notice, the Act also says that the landlord is able to
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recover the costs of cancellation and is able to charge a
“reasonable” penalty. The term “reasonable” is subjective
in that it would be reasonable to one person to pay
one month’s rent whereas another might say it will
take three to six months to find a good tenant, but the
landlord has to prove his claim by providing invoices
and proof of advertising.
The penalties charged are not to punish tenants for
early cancellation but rather to protect the landlord.
Both parties should stick to the guidelines of good
rental practice to avoid situations becoming difficult
and tense, especially in the case of an early cancellation.
Tenants should, if cancellation is unavoidable, notify
the landlord in writing, giving enough time from the
handing in of the notice to the date of vacation of the
property. The landlord should be able to find a new
tenant within a month of the existing tenant’s notice, if
he acts immediately and advertises the property.
Tenants must remember that the landlord is
dependent on the income from the unit rented out
and in return, landlords should keep in mind that most
tenants have strict budgets. The loss of deposit or a
month or two’s rent might be a huge financial blow,
and so both parties should be willing to negotiate a fair
settlement.

RESOURCES

www.theprcompany.co.za
SEPTEMBER 2015 SA Real Estate Investor

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