DEFINITION OF LEASE A lease is a contract whereby one party (known as the landlord or lessor) agrees to grant to another party (the tenant or lessee) the use and enjoyment of immovable property and the other party agrees to pay him rent in return. [look at Sharrack p230). It is immaterial whether you use the words ‘landlord’ and ‘tenant’ or ‘lessor’ and lessee’. We shall use the former as there is less likelihood of ambiguity (confusion). From the above definition it will appear that there are three essential elements to a contract of lease: © the property to be let; © the rent to be paid, and agreement to give the tenant the use of the property A lease is formed and becomes legally binding on the parties as soon as they have definitely agreed on these essential elements. No formalities are required to make the lease binding between the landlord and the tenant, But, as we shall see, however, there are some formalities which are required in the case of ‘special’ leases. These formalities are imposed by legislation. Please have a look at Sharrock on p.231 FORMATION OF LEASES Use of the property let By ‘use’ is meant the right to use and enjoy the property and the fruits thereof. However a tenant does not have the right to take away or remove the substance of the land. The limited use that a tenant has over the leased property is one of the features that distinguishes a lease from a sale, for example. The property to be let In our law it is not necessary that the landlord should be the owner of the leased property. It is simply necessary that he should be able to give the tenant the use and enjoyment of the property. Professor Sharrock makes some useful points on this at1.230, As in the case of contracts of sale, both parties must be ad idem as to the identity of the particular property which is the subject matter of the contract. The property let must be identified in the contract of lease, otherwise the contract will be void because of vagueness The rent The parties must agree on the rent. Here, two rules must be observed: * The rent must consist of money. Rent cannot consist of services; an agreement under which one party, for example, is given the right to occupy a room in a house if that party does the cooking and housework for the other party (this is, of course still a valid contract, but it is just not a contract of lease); and * the parties must agree on a definite amount of rent, or on a definite method of determining an amount. Ifno rent is fixed, there will be no lease and rent as such will not be claimable, however, in appropriate circumstances the owner of the premises may be entitled to claim against the occupier on the basis of unjust enrichment, (DURATION OF AND RENEWAL OF LEASES Q resrdualdere, wot eSsanteed too. It follows from what we have said earlier that duration of a lease is not an essential Duration of leases term of the contract. However, where the question is raised by the parties during their negotiations and regarded as essential by them, the contract is not concluded until consensus has been reached on the duration of the lease (remember that one of the tests as to when a contractual term is ‘material’ is when it may have induced the parties to contract with one another). Where duration of the lease has not been discussed by the parties (and is therefore not material) then the common law implies f the terms of duration. So you need to take a look at what the commom law has to say’ — Professor Sharrock is helpful here on pp231-233. th Mee dia ce og on enipanis mqaarnet (The duration of a lease at common law may take any one of the following forms:A lease for a definite period of time: In this case the lease ends automatically at the end of the period. + A lease until a certain event takes place: It is only valid to have such a lease where the event is certain to happen, Again there is automatic termination of the lease on the occurrence of the event © A lease from period to period: i.e, weekly, monthly, ete. This is known as a periodic lease and runs from period to period until terminated by notice by one of the parties. ‘The period of notice (that should be given by either party wishing to terminate) is usually fixed in the lease. Where no notice has been agreed upon the notice must be reasonable, Reasonable notice will depend on the periodicity of the lease, i. the length of each period (but it usually coincides with the period of rental payment) * A lease terminable at the will of the landlord: Here the landlord may terminate the Tease at his will without giving the tenant notice. On the death of the landlord the lease automatically comes to an end. Clearly you wouldn’t want this kind of provision in your lease if you were a tenant. © A lease at the will of the tenant : Here it is the tenant who may terminate the lease at his will, In the case of such a lease the landlord may not terminate the lease even by giving notice. The only ground on which the landlord could terminate such a lease would be on a breach of the lease by the tenant. In a similar vein as above, you wouldn’t want this kind of provision in your lease if you were a landlord, ‘Where no duration at all has been agreed on, the law has to imply the necessary terms, ‘What duration will be implied will depend on the agreement as to the payment of rent (which, as we saw earlier, is an essential term of the lease), Where rent is payable at regular intervals (e.g. at the beginning of every month), a periodic lease will be implied at the same intervals as the rent is paid.Renewal of leases On its expiry a lease may be renewed expressly or tacitly. + Express renewal: This is an express agreement to re-let the property concluded during or upon the expiry of the lease, Generally, the original lease will contain, an option to renew, which gives the tenant the right to renew the lease upon its expiration, If the tenant wants to exercise the right to renew the lease, then s/he must comply strictly with the option clause. © Tacit renewal: This is a tacit agreement (in other words nothing is expressly said but can be inferred) to re-let. It is concluded by, for example, the landlord permitting the tenant to remain in occupation of the property after the termination of the lease, and in fact accepting further rental payments from the tenant, In other words, ‘the landlord’ is content that the tenant should remain, and the tenant is, content to remain’, THE RELATIONSHIP BETWEEN THE PARTIES Immediately upon the conclusion of a lease, the landlord and tenant acquire certain personal rights against each other, as do they incur corresponding duties. These rights and duties need to be examined. Please look at Sharrock on pp.239-248. Remember that where the contract of lease says nothing (je. there is no express term) about who is responsible (ie. landlord or tenant) for performing a certain duty, then we will be able to imply such a duty into the contract if one exists in the common law ~ therein lies the importance of this section of law. ‘The common law duties of the landlord are: 1, to deliver the leased premises to the tenant; 2. to place the property in a proper state of repair at the commencement of the lease, and to maintain it i that state; and3. to give the tenant undisturbed use and enjoyment of the property. ‘The common law duties of the tenant are: 1. to pay the rent, 2. not to misuse the property, and 3. to return the property undamaged at the conclusion of the lease. ‘You must know exactly what each of these mean, Professor Sharrock’s notes on pp 239-248 will guide you here, Please try to understand what the cases tell us, ‘The duties of the landlord * Delivery of occupation of the leased premises: It is the primary duty of the landlord to deliver to the tenant the use and occupation of the leased premises. The landlord does clearly not fulfil this duty if for example the premises are occupied by some other person when he purports to deliver them; or if he fails to timeously hand over the keys (or any other meaningful access to the property), Where the landlord is in breach of his duty to deliver, then the tenant really has a choice of remedies: She may claim specific performance together with damages (do you know what ‘specific performance is?; or else she can cancel the contract and sue for damages (she do this because the landlord's breach is of a material term). * To place and maintain the leased premises in a proper state of repair: At the time of delivery the property must be handed over in a proper state of repair both externally and intemally. This means that it must be in a condition that makes it reasonably fit for the purpose for which it is let — ie, To live in if it is being let as a house, ete, The landlord is furthermore under a duty to maintain the property in that condition. But, the landlord is not obliged to repair damage done by the tenant or by any. person for whom the tenant is responsible, The reason for this, as we shall see, isbecause the tenant has a duty to return the premises to the landlord at the end of the leased period in the same condition in which it was originally delivered to her. The parties may, and often do, expressly agree that the duty to maintain should fall on the tenant. Such a clause is interpreted strictly by the courts. It is always wise to have such a clause if you are the landlord. If the landlord fails to comply with his duty to deliver the property in and maintain the property in a fit state of repair, the tenant has the following rights: If the failure to repair constitutes a material breach of the lease, the tenant may cancel the lease and vacate the premises. She will not be liable for the rent from the date that she vacates. The failure to repair will be a material breach when the disrepair is such as to make the premises unfit for the purpose for which they were let ~ this is a question of interpretation and you will have to make a judgement call here Whether the tenant elects to cancel the contract of lease or not, she may nevertheless be able to recover any damages that she may have suffered. So for example, if she needs to move out because the damage is so bad, then she will be entitled to claim the reasonable hotel expenses incurred while she finds alternative accommodation. If, however she doesn’t move out (so she remains in occupation), then she will be entitled to claim from the landlord the reasonable cost of repairing the defects. In the latter case, the tenant may simply deduct (off-set) these costs from the rent that is due. Finally, the tenant may leave the defect unrepaired, remain in occupation and demand reduction in the rent, The rent will be reduced to the same extent as the tenant’s right of use is impaired. Thus, depending on the circumstances, if she is forced to vacate one room in a five-roomed house, the rent will be reduced by one-fifth. © The warranty against interference: This is similar to the warranty against eviction in the law of sale, The landlord impliedly warrants that the tenant will not be disturbed in her possession either by himself or else by a thirdparty. He does not, however, warrant that the tenant will not be disturbed by a third party who has no legal right to the property — like a thief or a trespasser, But if the landlord enters the leased premises without the consent of the tenant then he is a trespasser (note, however, that the landlord has the right to inspect the leased premises at reasonable times and intervals ~ but he must first ask - and, if the tenant refuses him access, he may obtain a Court Order which permits him to enforce his rights.) ‘Where the landlord is in breach of his warranty against interference, the tenant may obtain an interdict. This is so whether the disturbance is that of the landlord himself or a third party who claims a legal right (subordinate to that of the tenant) to the occupation of the premises. If a third party without any legal right disturbs the tenant in her possession, then the latter must proceed against the third party - she obviously has no right against the landlord. Duties of the Tenant + Payment of the Rent : ‘The tenant must pay the agreed rent in the agreed manner, and at the agreed time, Usually the time for payment will be agreed on; the most common arrangement is that the rent is payable in advance, In the absence of agreement, the rent is payable in arrears, i. upon the expiry of the lease, or in the case of a periodic lease at the end of each period ‘* No misuse of the Premises: A tenant must ensure that the premises are not misused, and are used only for the purpose for which they are let. If the parties have expressly agreed on the purpose for which the property is let, it may only be used for that purpose. If there is no such agreement, a term is implied in the contract that the property is to be used for the same purpose as before the lease, Where the tenant misuses the property, the landlord has his ordinary contractual remedies. If the misuse is material (serious), he may cancel the lease and eject the tenant, and claim such damages as he has suffered. If the misuse is not material,10 he is confined to an action for damages. Finally, he may interdict the tenant from misusing the property. © To retum the pros the conclusion of the 1 At the conclusion of the lease the premises must be returned to the landlord; and they ‘must be retumed undamaged. A tenant who fails to retum the property at the conclusion of the lease is said to be holding over’. The landlord may seek an order ejecting him from the premises and claim such damages as he has suffered. Where the premises are returned in a damaged state, the landlord may claim damages unless the tenant can prove that the damage was not caused by his negligence or wrongful act or by an act on the part of any person for whom he is responsible. The onus, it will be noted, is on the tenant. A tenant is responsible for the acts of members of his household, including those people who reside with him in the house with his consent. _ The Landlord’s Tacit Hypothec for Rent — ‘As we noticed above, when the tenant falls into arrears with his rent, the landlord’s remedies are limited. As a compensating factor, he is given a very valuable form of security for the recovery of the rent in arrears. This is known as the landlord’ tacit hhypothec. It is the security which the landlord is given, for the recovery of arrears rent, over the movables which are situated on the lease premises when its assistance is invoked, Sharrock, surprisingly, doesn’t deal with this issue at all in his chapter on lease. He does, however, deal with it at ppS09-511 in the chapter on “security”. You should definitely take a look at this. The following property is subject to the landlord’s tacit hypothec:The Tenant's Property : A tenant’s movables which are brought onto the premises with the intention that they remain there indefinitely are subject to the landlord’s hypothec, even though the landlord has no knowledge that they are on the premises. ‘Sub-tenant’s Property : A sub-tenant’s movables, brought onto the premises with the same intention, are also subject to the landlord's hypothec, but only to the extent to which the sub-tenant owes the tenant rent, If the sub-lease is invalid, then the ‘sub-tenant” is in the same position as any other third party whose property is on the premises. Of course, the tenant (as sub-landlord) also has a tacit hypothec over the sub- tenant's goods in respect of the rent due by the sub-tenant. Third Party’s Property: The property of a third party may also become subject to the tacit hypothec. The rule, laid down by the Appellate Division, is as follows: “When goods belonging to a third person are brought on to the leased premises with the knowledge and consent, express or implied, of the owner of the goods, and with the intention that they shall remain there indefinitely for the use of the tenant, and the owner, being in a position to give notice of his ownership to the landlord, fails to do so, and the landlord is unaware that the goods do not belong to the tenant, the owner will thereby be taken to have consented to the goods being subject to the landlord’s tacit hypothec, and liable to attachment.’ See Bloemfontein Municipality v. Jackson Lid., 1929 AD. 266 at p. 271. These requirements, then, must be satisfied before there is a hypothec over a third party's goods: ‘The landlord must have no knowledge that the goods belong to a third party.2 2. The third party must know that the goods are being taken onto the premises, and consents thereto expressly or impliedly. 3, The third party must have the intention that the property should remain on the premises indefinitely. 4, The property should be for the use of the tenant. The tacit hypothee is particularly significant where the tenant is the buyer of goods under a hire-purchase agreement, for the goods, if brought onto the premises, will be subject to the landlord’s hypothee unless the seller makes it clear to the landlord that he does not consent,