Part 2: Recourse for the Landlord after lawfully cancelling the Lease Agreement
In part one of this series, we discussed the manner in which a Landlord may cancel an agreement of lease, and practical steps were provided that need to be followed in order to ensure the lease agreement is lawfully cancelled, enabling the Landlord to proceed with legitimate eviction steps and/or claim(s) for damages.
Once the Lease Agreement is lawfully cancelled by the Landlord, the Landlord may have various forms of recourse against the previous Tenant.
LANDLORD'S RECOURSE AGAINST THE TENANT
In many instances, the Tenant will unlawfully remain on the property, even though the Landlord has lawfully cancelled the lease agreement. In legalese the Tenant is then no longer referred to as a Tenant, but rather as an Unlawful Occupant by reason of the fact that the lease agreement between the parties have been cancelled and with that, also the right of the Tenant to remain in occupation of the leased premises.
1. Claim for arrear rental:
Firstly, the Landlord may have a claim for any arrear rental payments still payable by the Unlawful Occupant, as well as any other amounts that became due and owing in terms of the agreement of lease before the date of cancellation (for example water and electricity). A claim for arrear rental is in most instances a straightforward contractual claim, as it was agreed between the parties that the tenant would on a determined date make payment of rental and other amounts in terms of the agreement of lease.
It is important to note that in most instances, claims prescribe 3 years after becoming due and payable. It is therefore of the utmost importance that landlords ensure that their claims, especially for arrear rental, are brought timeously and within the prescribed 3-year period.
2. Claim for "holding over":
Secondly, the Landlord may have a claim for what is called in legalese "holding over". This is where the Tenant remains in unlawful occupation of the leased premises, without making any further payments, after the lease agreement was lawfully cancelled by the Landlord. The Landlord is prevented from concluding a new lease agreement with a new Tenant, until such time that the Unlawful Occupant vacates the premises.
This claim is based on the damages a Landlord suffers because of the period the Unlawful Occupant remains in occupation of the leased premises after the date of cancellation, preventing the Landlord to conclude a new lease agreement with a new paying Tenant.
In calculating these damages, the rule of thumb is that the market-related rent payable for similar premises should be considered. However, often the now-cancelled agreement of lease already, unbeknownst to the parties, makes provision for this scenario and is usually worded as follows: –
"In the event of the Landlord cancelling this agreement and the Tenant remaining in occupation of the Leased premises after such cancellation, the tenant shall be liable for damages for holding over in the amount equal to the rent payable in terms of the agreement at such time of cancellation."
It is important to note that often there is no way of telling at what stage an Unlawful Occupant may vacate the premises, bearing in mind that they may not be evicted from a leased premises without a Court Order. This means that the calculation of the exact amount of the claim for holding over will be problematic, seeing that the Unlawful Occupant remains on the premises indefinitely. For this reason, the claim for holding over can therefore initially be instituted together with the claim for arrear rental, and then just amended at a later stage once the Unlawful Occupant has vacated voluntarily or due to a Court Order.
3. Applying for an Eviction Order:
Thirdly, a Landlord can apply to Court for an Eviction Order where the Unlawful Occupant refuses to vacate the premises after lawful cancellation of the lease agreement. Whether the agreement of lease is for residential or commercial purposes, the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, 19 0f 1998, ("PIE Act") may find application in these circumstances.
Landlords should as a first step determine whether any persons are resident on the leased premises and inform their attorneys accordingly. Should it be found that no one is resident on the leased premises, the PIE Act will not be applicable. Should the PIE Act however apply, the process that needs to be followed is prescribed in terms of this Act and proper compliance therewith is essential for the effective and efficient eviction of an unlawful occupant.
It is essential for Landlords to institute eviction proceedings as soon as possible in order to mitigate financial losses as a result of the unlawful occupation. In South Africa, no person or entity may be evicted or ejected from a leased premises without a Court order.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.