Landlords are automatically vested with the right to seize the goods of tenants who have defaulted on rental payments to secure their claim, however, before Landlords may do so, it is necessary that due process be followed.
In many Hollywood blockbusters, we frequently witness scenes set in typical white-collar office environments. Employees are engaged in mundane tasks like making coffee or filling out spreadsheets. Then, suddenly, chaos ensues. Teams of officials burst through the windows—interestingly, burglar bars seem to be a rarity in Hollywood's version of offices—and begin a frenzied seizure of items. Laptops, documents, and even the fish tank in the executive's meticulously kept private office are confiscated. Meanwhile, the executive desperately phones their attorney, protesting the apparent unlawfulness of the situation.
While Hollywood tends to over-dramatise these scenarios for shock and entertainment, often portraying the enforcement of rights as straightforward and vocal, akin to Michael Scott from "The Office" simply declaring them, the reality can be quite different. In South Africa, both landlords and tenants are often surprised to learn about the legal provisions. According to South African law, it is entirely lawful for items like laptops, trade stock, furniture, and even fish tanks located on leased premises to be judicially attached. In some cases, these items can be removed immediately by court officials. This legal reality can be as startling as any cinematic portrayal, challenging common assumptions about property rights and legal procedures in lease situations.
This right of a landlord to judicially attach (and sometimes immediately remove) goods on a leased premises is commonly referred to as the Landlord's Hypothec and may be called upon the moment a tenant is behind on rent. The landlord before doing so, however, needs to follow due process.
The purpose of the hypothec is to provide interim security for a landlord's claim for overdue rent pending the outcome or in anticipation of formal legal action for the recovery of overdue rent by obtaining an interdict preventing the disposal or removal of goods on a leased premises.
The question, however, arises as to how a landlord may enforce this unique right, which goods may be seized under the hypothec, under which circumstances may goods be immediately removed, and when may the goods so judicially attached be sold in payment of the landlord's claim for rent.
A Landlord may only enforce a hypothec by following due process and may not do so by itself. The Landlord has a choice to approach a presiding officer on an urgent basis to obtain a Court Order authorising the attachment of the goods on the leased premises or by way of a rental interdict summons, although the efficacy of a rental interdict summons is questionable.
Upon a landlord seeking to enforce its hypothec, the presiding officer needs to be satisfied that the tenant is overdue on rent and/or the tenant is on the point of removing goods from the premises to avoid his rental obligations to grant an order perfecting the Hypothec.
In circumstances where a landlord has obtained a court order to perfect the hypothec, the sheriff of the Court is instructed and authorised to immediately enter the leased premises and place under judicial attachment goods on the leased premises to the value of the landlord's claim and legal costs. The goods so placed under judicial attachment may not be removed until the further legal action has been completed, or until the tenant provides sufficient security to the value of the Landlord's claim and legal costs.
Tenant will be surprised to find that not only are the goods belonging to it be placed under judicial attachment, but also place under judicial attachment any goods found on the leased premises whether it is owned by the tenant, subtenant, or even third parties with the exception that goods under an instalment sale agreement as defined in the National Credit Act or under a registered notarial bond may not be attached.
Given the specific circumstances, the presiding officer may even grant an order that the goods may be immediately removed to a place of safe keeping. For immediate removal there however should be an apprehension that the tenant is about to remove the goods on the leased premises, or there must be circumstances that would render the attachment invaluable. Any person with knowledge of the attachment may be found to be in contempt of court, or criminally charged should they remove goods under the attachment.
The goods under judicial attachment may only be sold in circumstances where the tenant consents thereto, or when the landlord obtains a separate court order for payment of the amount owed and thereafter a warrant of execution has been authorised for the sheriff to sell the goods on public auction.
Although the Landlord's Hypothec and the enforcement thereof may seem dramatic and drastic especially from the point of an unsuspecting tenant, South African law has evolved to ensure the necessary checks and balances and the relevant factors are considered before the Landlord enforces its Hypothec.
Vesting the Landlord's Hypothec is an invaluable, fast, and exceptional right that all Landlords can capitalise on, however, by the very nature of its uniqueness there are various factors that needs to considered and several technical requirements needs to be met. It is therefore imperative that Landlords consult their attorneys to assist in considering all the relevant factors and taking the required steps to enforce this surprising right.
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.