By Ashleigh Laurent, TPN Legal Counsel
TPN’s Residential Lease makes provision for the common law
remedy available to Landlords known as the Landlord’s Tacit Hypothec. This can
be defined as a form of real security which secures the Tenant’s obligation in
respect of arrear rental due to the Landlord.
The Landlord would be entitled to attach movable property on
the leased premises equal in value to the arrear rental, together with the
costs of recovering such rental. These goods can then be sold in execution and
the proceeds would then be utilised to satisfy the outstanding debt to the
Landlord.
There are five common questions that TPN receives regarding the Landlord’s Tacit Hypothec, almost weekly! These are:
1. What if the prospective Tenant does not agree to the Landlord’s Tacit Hypothec clause?
It is imperative for the Tenant to understand that the
Landlord’s Tacit Hypothec comes into effect by operation of law and as such,
the Landlord would not need to specifically include this in a lease agreement
because it is dictated by existing legal principles. Therefore, there does not
need to be agreement between the Landlord and Tenant because it is an implied
remedy afforded to Landlords.
2. My Tenant is in arrears, can I just attach the movable
property on the leased premises?
No, the Landlord does not automatically obtain this right. It
would need to be perfected by means of a court order. It is advisable to
approach an experienced attorney to institute this action on your behalf.
Unpaid rent is usually pursued by means of an automatic rental
interdict summons in terms of section 31 of the Magistrates Courts Act. The
Landlord can, in addition to this, institute an urgent ex parte application in
terms of section 32 of the Magistrates Courts Act for the attachment and
removal of the Tenant’s movable property in lieu of the arrear rental. This
section does require that the outstanding rent, “be demanded in writing for the
space of seven days and upwards,” or “if not demanded that the Landlord believes
that the Tenant is about to remove the movable property upon the said premises.”
3. What happens if the Tenant moves the movable property off
the leased premises?
The answer to this question would be dependent on whether
the Landlord has perfected their right by means of a court order. If, the
Landlord has not obtained an order then the Tenant is free to remove the
movable property off the premises at any time. However, if the Landlord has
obtained the relevant order, and if the Tenant subsequently removed the movable
property off the premises, the Tenant’s actions could constitute a criminal
offence, and they could be held in contempt of court or even charged with
theft.
It is important to note that the Landlord’s right to attach
movable property exists so long as the movable property is on the respective premises,
or the movable property has not reached its destination whilst being
transferred by the Tenant. The Landlord’s Tacit Hypothec automatically falls
away if the movable property is not on the premises and has reached its destination,
or if the Tenant has paid up the outstanding rent.
4. Is the Landlord’s Tacit Hypothec enforceable against a
spouse?
If the parties are married by the default position of in
community of property, the general position is that either spouse may perform
any juristic act with regard to the joint estate without the consent of the
other spouse, subject only to the restrictions in the Matrimonial Property Act.
Therefore, either spouse may enter into a lease agreement without the formal or
informal consent of the other spouse. As such, the other spouse would be cited
as a co-tenant in the lease agreement.
Accordingly, if the spouses fell into arrears in respect of
their rent, the Landlord would be entitled to attach movable property on the
leased premises equal in value to the arrear rental, together with the costs of
recovering such rental from the joint estate.
5. My Tenant has been sequestrated - is the Landlord’s Tacit
Hypothec still enforceable?
South Africa’s Insolvency Act does recognise the Landlord’s
Tacit Hypothec as a remedy in securing unpaid rent. A Landlord is, therefore,
entitled to perfect the Tacit Hypothec regardless of whether the Tenant has
been sequestrated or not. In addition to this, the Landlord need not have
perfected the Tacit Hypothec prior to sequestration. Landlords in this instance
are recognised as preferent and secured creditors and can accordingly receive
payment before other creditors but after the costs of the Administrator are accordingly
paid.
It is important to note, however, that section 85(2) of the Insolvency Act places a limitation on the amount of the claim. In that, “a Landlord’s legal hypothec shall confer preference with regard to any article subject to that Hypothec for any rent due in respect of any period immediately prior to and up to the date of sequestration but not exceeding (a) three months, if the rent is payable monthly or at shorter intervals than one month.” The Insolvency Act also speaks to time periods where rent is payable in intervals exceeding one month. If the amount exceeds the limit stipulated, the remainder of the amount would be deemed unsecured.
Practically speaking, it is imperative that the Landlord
weighs their options as the costs associated in the application perfecting a
Landlord’s Tacit Hypothec, including the costs of the sheriff and costs of the
auction, can be exorbitant. Imperative factors for the Landlord to consider are
the circumstances of their specific matter and the amount of rent outstanding.
Have any questions regarding the Landlord’s Tacit Hypothec?
Contact TPN today on 0861 876 000 or legal@tpn.co.za
To download the latest version of the Residential LeasePack, click here.
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