Avoid ‘huur gaat voor koop’

Roman Dutch Law introduced the legal principle of huur gaat voor koop to the South African legal system. Numerous court judgments have solidified this common law principle today as it was in the past. The question now is: ‘does more recent legislation take away from this established principle?’

So, what does ‘huur gaat voor koop’ really mean?

Regardless of whether a lease agreement in respect of a property which is sold, is verbal, written or even tacit, the lease agreement will supersede the sale of the property.

In other words, the new owner of the property will not be entitled to cancel the lease agreement solely based on their new ownership of the property, and will be bound by the current lease agreement that is in place.

The reason for this, is that the right of occupation is transferred separately upon the purchase of a property. The tenant will retain the right of occupation since this right has already passed to him for the full term of the existing lease agreement.

As such, the tenant’s right of occupation remains unaffected. The only consequence being that from the moment of transfer, the tenant will be legally bound, to the new registered owner instead of the previous owner.

Huur gaat voor koop is applied automatically by way of law and for this reason, the purchaser will ‘step into the shoes of the landlord’ upon transfer without any further legal formalities.

What does the Rental Housing Act say about this?

The Rental Housing Act stipulates that the landlord would be entitled to terminate the lease agreement when both these conditions prevail:

• when the lease agreement specifically provides for the early termination of the lease agreement
• when the reason for early termination does not constitute an unfair practice.

“Rental Housing Act 50 of 1999, section 4(5)(c):
The landlord’s rights against the tenant include his or her right to –
(c) terminate the lease in respect of rental housing property on grounds |
that do not constitute an unfair practice and are specified in the lease;”

An example of an unfair practice would be when the landlord terminates the lease agreement upon knowing that he can earn an increased rental income by entering into a lease agreement with a different tenant.

How to ensure your lease agreement avoids ‘huur gaat voor koop’

If your lease agreement allows the landlord to terminate the lease should he wish to sell the property, he may do so. In this case, the principle of huur gaat voor koop will not apply, and the lease agreement may be terminated.

Given that huur gaat voor koop is a common law principle, contracting outside of this, in line with legislation, supercedes this principle.

What does this mean for you?

Rental law is complex. Apparent conflicts between legislation and common law principles merely mean that you need to formalise contracts that strengthen your position as a landlord.

The Residential LeasePack has been updated, by our drafting attorneys, to strengthen the rights of the landlord whilst providing for tenants’ rights and obligations in a way that benefits both parties – all based on legal matters that have been tried and tested in Courts on a regular basis.

To download the latest version of LeasePack, please visit the TPN Shop.

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