Answers to lockdown rental questions

Answers to lockdown rental questions

MAIN IMAGE: Marlon Shevelew, specialist rental property attorney.

The sudden 21 day lockdown has left thousands without income and in dire straits about how they are going to meet their rental obligations. Specialist rental property attorney Marlon Shevelew weighs in with legal advice for estate agents.

Someone said earlier this week that the one thing one can be certain of in these uncertain times is uncertainty. As President Cyril Ramaphosa said earlier this week, the current situation with the coronavirus pandemic and the nationwide lockdown to curb the spread of the virus, is unchartered territory.

Last week Shevelew in ‘Lockdown: How to deal with rent and levies’ explained that the current lockdown would qualify under the law as an ‘act of God’ (in legal terms called force majeure or vis major) and how that then impacts on the legal obligation to meet residential and/or commercial rent requirements. The response has been unbelievable. Tenants, landlords and rental and estate agents alike have responded with a torrent of queries: What about tenants that are self-employed/sent home because their business closed due to the lockdown – so no income to pay April’s rent? Can a landlord threaten to blacklist a tenant who can’t pay rent? What does the law say about sectional title levies that are due? What about rental for vacated student accommodation?

Property Professional asked Shevelew to respond with more legal advice on how to deal with some of the most asked questions.

1. No income due to lockdown, but landlord says rent is due. What are my options as tenant?

Answer: Unfortunately, you are obliged to pay your rental at this stage. Your residence was rented for the purpose of providing yourself a place to stay and you are able to make full beneficial use of the property for this purpose. The fact that you cannot earn an income does not release you from this obligation. Your position is tantamount to someone who has been retrenched.

2. Can a tenant be blacklisted by an estate agency for failure to make rental commitments?

Answer: In principle, yes. However, in an industry circular the National Credit Regulator has declared that the days of the lockdown are not included in business days. See in this regard: https://debtfreedigi.co.za/lockdown-days-are-not-business-days/.

To have an adverse listing made on a consumer’s profile, they need to be three consecutive billing cycles behind and must have been given 20 business days’ notice of the intention to load the adverse listing. If the tenants were already in arrears and had received a notice, but the 20 business days had not expired prior to the lockdown, then the adverse listing will only be able to be made after the lockdown. If there had been no notification prior to the lockdown, then the notice period will only begin to run after lockdown, but in principle the adverse listing will still be able to be made once that time has run out.

3. The Sectional Titles Act requires all owners to pay their levies no matter what. If owners decided, because of the coronavirus not to pay, many bodies corporate would become bankrupt. Are levies on the same footing as rents?

Answer: The point of departure in a lease is that if a tenant does not have beneficial use, it will be entitled to remission of rental; this is the common law position of a tenant iro vis major. Nonetheless, a tenant’s entitlement to remission of rental can be excluded by agreement between a tenant and a landlord; this is usually done by a clause regulating the effects of vis major (often called a force majeure clause). Some leases, for example, state that rent is payable even if the tenant is unable to make use of the property as a result of vis major.

The legal relationship between a body corporate and an owner of a sectional title is regulated by statute, and not based on the principles of beneficial occupation, etc. It is on a completely different footing and regulated by completely different principles. The point of departure is therefore not the same as in leases, and a landlord will not be entitled to withhold levies.

4. What about rental for student accommodation? Many parents with children in universities signed lease agreements for private student accommodations where students are no longer in the accommodation as they were told to pack up and return home.

Answer: In this case the question will arise: what was the purpose for which the property was let. If the agreement makes clear that the private student accommodation was let for the express purpose of a student studying at a university, then perhaps the tenant will be entitled to remission of rental. But if the lease is a standard lease which merely entitles the tenant to occupy it, and the tenant vacated it voluntarily, then the tenant will likely not be entitled to remission of rental. In the case of official university residences, a student residing there will have a much higher chance of being entitled to remission of rental, assuming of course that there is no clause excluding remission of rental even in the event of vis major, as a student in such a case will not be able to have beneficial use of the property.

5. How many months can tenants be given rental holiday?

Answer: A commercial tenant, where a lease does not exclude remission of rental as a result of vis major, will be entitled to remission of rental for the full period of the lockdown. A residential tenant is not entitled to any holiday, but if the landlord should decide to grant one, the duration is essentially an indulgence and therefore up to the landlord to decide.

6. If a tenant’s lease ended at the end of March, but he asked to stay on until the end of lockdown, is he entitled to his deposit? Linked to this query, some landlords have been demanding that rental agents pay over the rental deposit of tenants who can’t pay their rent. Can they do this?

Answer: In terms of the Rental Housing Act 50 of 1999, where a tenant remains in occupation of a property after the expiry of a fixed-term lease, that lease will continue on the same terms, save that it will be a periodic lease and either party will be able to terminate on one calendar months’ notice. Therefore, the tenant will be entitled to have the deposit returned on the same basis as it would have in the original lease. The Act does not make provision for use of the deposit during the duration of the lease; landlords are not entitled to demand that the deposit be paid over, as this is contrary to the wording of the Act.

7. What about tenants who are already in arrears with their rent? One landlord has a tenant who is 3 months in arrears. The electricity bill alone is already R20 000 and the rentals in arrears are over R70 000. The contract is concluding end of April. The landlord is outside the country and not able to return due to the coronavirus pandemic. What can he do in this situation?

Answer: Tenants who are in arrears are a common problem faced by landlords. In this regard an attorney should be approached who can send out letters of demand, and once lockdown is over, issue legal process to ensure repayment of the arrear rental, and eviction, if necessary. Whether this will be the desired course of action, as opposed to waiting to see whether the tenant pays up is difficult, and a decision which the attorneys can also assist with.

Shevelew concludes with the following: “The above content is intended to provide general guidance on the particular questions raised only and should not be regarded as general legal advice, as each situation is unique. Professional advice should be sought before any actions are taken based on such content. Accordingly, any liability that would or could arise as a result of the content of this opinion is hereby excluded to the fullest extent allowed by law.” He can be contacted on marlon@marlonshevelew.co.za.

Showing 16 comments
  • Tania
    Reply

    How do we handle a lease agreement that was signed by all parties; deposit and first month’s rental has been paid and received and agent received their commission; the lease start date is 01 April 2020 while the tenant, who is an International Corporate Company, cannot travel to SA due to the lockdown to take occupation of the property?.

    Questions:
    -Can the landlord hold the Corporate Tenant liable for the monthly rental going forward?
    -Can the Corporate refuse to pay rent until the lockdown has been lifted?
    -Can the landlord demand the refund of the agent’s commission?
    -Can the corporate cancel the Lease?

    • Lynn Ferreira
      Reply

      Very informative and helpful thank yiu

  • Maggie Jean-Pierre
    Reply

    This is really so helpful, ThAnk you so much

  • LESLIE HOWARD TAYLOR
    Reply

    Thank you for the information.

  • Claire Rosekilly
    Reply

    Thank you for the info.

  • Kallie Geldenhuys
    Reply

    On first Q/A I would like to make very clear that the position is not tantamount (as you put it) to someone being retrenched. This is lockdown due to world wide crisis. No options left. Can’t just go and find a new job while your spouse takes care, both are on lockdown. What happens if this lockdown has to be extended?

  • Jenny
    Reply

    A tenant who was supposed to move 1 April but was able to take occupation 26 March, has now given notice to terminate the lease.
    Is he still liable to the penalties as per the lease agreement?

  • David
    Reply

    Good day, a question please. I have given notice at my place and have moved out completely before lockdown. The estate agent says that they will only pay my deposit back to me once lockdown is over. Is this allowed?

  • Nelly
    Reply

    I am a parent of a Tenant at urban oceans student accommodation. My daughter left the premises on the 21st of March due to lock down. I have paid for April but the lockdown was extended even now I am not sure that next month she will go back since the President said no movement to other province and school is still closed. When I signed the leased agreement no one knew about this disaster virus. Now I received the bill for may.please help.

    • Margo
      Reply

      Lease expired with agency on the 31st of April. It became a month to month agreement. A verbal agreement. Can I terminate service with agency and take over rental myself as not happy with agency and there is no written signed lease at moment.

  • Buks de Kock
    Reply

    Please advise
    A tenant`s lease expired end of March (or April)
    Thus there is no lease agreement or month to month for that matter
    The tenant does not want to stay there anymore thus due notice was given
    This tenant is now moving to his parents house where no rent is payable
    But he is now forced to stay illegally in a place he does not have an agreement for and forced to pay rent where he does not pay rent at his parents house
    Surely he is not liable to pay rent ?

    • John Terry
      Reply

      Hi Buks,

      I like your question as it’s similar to mine.

      I’m in anticipation of the response of the professionals.

      Regards.

  • John Terry
    Reply

    What happens in my case when my landlord terminated our lease during mid April in during the lockdown effective on 31 May 2020? I agreed that I will comply and vacate the premises because I cannot afford to pay the rent as a result of my income that has come to complete standstill. I managed to pay April but I’m not able to pay May. I have requested for the month’s rent to be deducted from my deposit but they’re not having that.
    I have now been sent a ‘declaration of income form’ by the agent requesting my bank statements; which I might add was not needed upon moving in here last year October 2019.

  • Margo
    Reply

    Lease expired with agency on the 31st of April. It became a month to month agreement. A verbal agreement. Can I terminate service with agency and take over rental myself as not happy with agency and there is no written signed lease at moment.

    • DIANE
      Reply

      I rent an office in the clubhouse of a golf estate. Due to lockdown I have not been able to access it or earn income. My lease is R28k. I paid R15k for April which is all I could afford. I then asked that rental for the month of May be wavered. They said I must pay full rental. My industry only opens level 2. I gave them notice with immediate effect. My lease agreement ended in Nov last year and I have been on month to month. Now they say I must pay full April and May before I can get my deposit back.

  • Joan
    Reply

    I am a subletting premises to a tenant on a month to month basis, and have had no rental for April and May, and the tenant has not kept me informed. Can I offer alternative accommodation at a fraction of the payment rate (not as nice), so that my partner’s very old father can occupy the premise the tenant is occupying at the moment? If so, when could I give notice, as the lockdown level 4 may interfere with moving? Apparently people can move by the 7 June, no later.

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