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.
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