How to evict a tenant: How has the CPA changed the notice period?
Rent is late…again. As this dreadful month-end ritual unfolds, you can’t help but wonder: Will the rent be paid in full, or at all, this time? If not, what then? Can this situation be resolved? How can it be prevented? Perhaps the most common predicament landlords face when having to evict a tenant is the uncertainty of what to expect and figuring out what to do. In her book, The Landlord’s Guide – Property Rental and Eviction, attorney and MD of SSLR Inc, Cilna Steyn, provides guidance on some of the typical problems facing landlords while providing the legal options available to address them.
Steyn has kindly granted HomeTimes permission to republish her book.
Last time we explored in little detail the various statutory laws that apply during an eviction process. Here, we explore the Consumer Protection Act, Rental Housing Act and its anticipated amendment, and their application on eviction.
The Consumer Protection Act 68 of 2008 has considerable impact on lease agreements. The act has been passed in order to regulate and normalise the relationships between the suppliers of various goods and services and their consumers in the marketplace. In order to properly assess and interpret the CPA, one must take cognisance of the ambit, intention, and purpose for which the act was passed.
The Consumer Protection Act 68 is an act which aims to:
“… promote a fair, accessible and sustainable marketplace for consumer products and services and for that purpose to establish national norms and standards relating to consumer protection, to provide for improved standards of consumer information, to prohibit certain unfair marketing and business practices, to promote responsible consumer behaviour, to promote a consistent legislative and enforcement framework relating to consumer transactions and agreements, to establish the National Consumer Commission…”
In this regard, it is important to pay attention to section 14 in particular
Section 14 – Expiry and renewal of fixed-term agreements
Section 14 of the Consumer Protection Act 68 of 2008 is the section dealing with the expiry and renewal of fixed-term agreements. This section extends to numerous forms of agreements but most notably for the purpose of this discussion, fixed-term lease agreements.
Upon reading section 14 it is clear that transactions between juristic persons would automatically be excluded from the provisions of Section 14. Hence, a fixed-term lease agreement concluded between a juristic landlord and a juristic tenant is excluded in terms of sec 14(1). It is important to note that according to the definitions of the CPA, partnerships, trusts, bodies corporate and associations are considered juristic persons.
The above provision does not make any further averments beyond what is contained in sec 14 (1). We can therefore assume that the legislature intended to bind fixed-term agreements between either; two or more natural persons or; between two or more natural persons and a juristic person, or vice versa.
The act does not stipulate the form of fixed-term agreements to which sec 14 applies, apart from the agreement having to fall within the definition of a consumer agreement. From this we can once again only infer that the legislature intended to leave this open in order to encapsulate a wide array of fixed-term agreements.
It is important to point out the following:
- Sec 14 will not apply to lease agreements entered into between juristic persons, regardless of their annual turnover or asset value.
- Sec 14 would apply to all fixed-term lease agreements (excluding the above) regardless of the specific property type.
- The term of the agreement may not exceed 24 months, unless a longer period is expressly agreed upon, and the landlord can show a demonstrable financial benefit to the tenant, resulting from the extension of the default 24 months. In lease agreements, a longer term would, for example, have the financial benefit that the tenant would not have to pay a deposit at new premises, and would not have the financial burden of moving costs etc.
The landlord may cancel the agreement with 20 business days’ notice, but needs to prove that:
i) the tenant was in breach of a material term of the agreement; and
ii) the tenant was demanded to remedy the breach but failed to do so in full.
- Notice must be given to the tenant regarding the imminent expiry of the agreement, not more than 80 business days and not less than 40 business days before expiry of the lease. If this notice is not given the lease will not terminate.
- Upon expiry, these lease agreements will automatically renew on a month-to-month basis, subject to the Rental Housing Act and be amended only in respect of material changes to which the landlord has given notice. The CPA however provides that a month-to-month renewal will be effective upon expiry, unless the tenant expressly directs the landlord to terminate the agreement on the expiry date or agrees to a renewal for a further fixed term.
- Fixed-term leases that are subject to the CPA are terminable on notice by the tenant. The lease is therefore cancelled on 20 business days’ notice to the landlord. The landlord however, by contrast, may only cancel the contract for a material breach of the contract by giving 20 business days’ notice of the breach and the opportunity to remedy the breach.
While it may seem irregular that the tenant may terminate the lease agreement irrespective of the reason, the landlord may, on cancellation by either party impose a “reasonable cancellation penalty in contemplation of the agreement enduring for its intended fixed term.” Regulation 5(2) provides that a penalty may not exceed a reasonable amount taking into account various factors listed in the regulation such as:
the amount that was still owed under the remainder of the period;
the value of the transaction up until cancellation;
the duration initially agreed upon;
the length of notice of the cancellation;
the potential for the landlord to find a replacement tenant; and
the general practice relevant to the industry.
- While the notice of cancellation in terms of the CPA only applies to fixed-term leases, the notices in terms of the provision of the RHA apply to periodic leases.
- As was mentioned earlier, there is a significant difference between the cancellation of the lease agreement and the termination (or expiration) thereof. Notice must be given to the tenant of the imminent expiry of the agreement which is prescribed as not more than 80 business days and not less than 40 business days before expiry of the lease.
Example: Ben, the landlord, rents his property to Peter and they both sign a one-year lease agreement. Because the lease agreement is a fixed-term agreement, it will be subject to the provision of the CPA. Should Peter decide to move to New York, he may notify Ben of his intention to cancel the lease agreement in 20 business days. However, Ben will only be able to cancel the lease agreement if Peter is, for instance, not paying rent or using the property as a brothel. Should Peter be using the property as a brothel, Ben must send a notice to Peter in which Peter is informed that he has 20 business days in which to cease the activity on the property. Only if he has failed to remedy such breach, will Ben be allowed to cancel the lease agreement.
If, for example, after about nine months Ben decides that he would prefer to place another tenant in the property, he must notify Peter not more than 80, and not less than 40 business days before the impending termination of the lease agreement at the end of the year.
However, should Ben not have notified Peter and Peter continues to reside on the property after the year has lapsed and no further renewal has been signed – yet Ben continues to accept rental payments – the lease agreement is no longer fixed, but continues on a month-to-month basis. The lease agreement will now be subject to the RHA and not the CPA. Either the tenant or the landlord may notify the other of the termination of the lease agreement by one months’ notice and the reason therefore is irrelevant.
Rental Housing Act
As briefly explained above, the Rental Housing Act bears specific reference to the termination of the lease agreement. Section 5(5) of the act states the following:
5(5): If on expiration of the lease the tenant remains in the dwelling with the express or tacit consent of the landlord, the parties are deemed in the absence of a further written lease, to have entered into a periodic lease, on the same terms and conditions as the expired lease, except that at least one month’s written notice must be given of the intention of either party to terminate the lease.
It is clear that, although the lease agreement is considered to have terminated by the effluxion of time, this is not the case if the tenant remains in the property and the landlord continues to accept rental payments. In which case, termination of the lease agreement is effected by either party giving one months’ notice of the termination of the lease.
The RHA establishes the Rental Housing Tribunal. The RHA gives the tribunal extensive powers to set aside rentals that are found to the “exploitative” and to replace them with rentals that are considered to be fair and equitable. The Tribunal is empowered to rule that unpaid rental can be recovered and now also has the power to issue spoliation orders, attachment orders and interdicts. A ruling of a Tribunal is deemed to be an order of a Magistrates’ Court and is enforced by the Magistrates’ Court Act. Although a Magistrates’ Court may grant evictions, the Tribunal is, however, not empowered to grant eviction orders. An eviction can only be obtained by a court order. In view of this, it is clear that evictions must be dealt with according to PIE and not according to the RHA.
The Tribunal may only determine a dispute relating to an unfair practise of proceedings not commenced in a court of law. Although it can be helpful in certain cases to refer the matter to mediation or the tribunal, it should be borne in mind that instituting a complaint in the tribunal stays all legal proceedings for a certain amount of time as per Section 13(7).
Section 13(7) states the following:
(7) As from the date of any complaint having been lodged with the Tribunal, until the Tribunal has made a ruling on the matter or a period of three months has elapsed, whichever is the earlier –
(a) the landlord may not evict any tenant, subject to paragraph (b);
(b) the tenant must continue to pay the rental payable in respect of that dwelling as applicable prior to the complaint or, if there has been an escalation prior to such complaint, the amount payable immediately prior to such escalation; and
(c) the landlord must effect necessary maintenance.
Once a complaint has been lodged in the Housing Tribunal, a moratorium is placed on all legal proceedings until the matter is resolved or until three months have lapsed, whichever is the earlier. The regulations however require a Tribunal to determine whether a dispute actually exists within 30 days of the complaint.
CASE STUDY: BUCK V EBLEN
(Courtesy Cilna Steyn)
Our client, Ms Buck approached us in order to evict Mr Eblen and his family. Once a terms letter had been sent out in which they were afforded 20 business days in which to remedy the breach by effecting arrear rental payment, Mr Eblen approached the Rental Housing Tribunal and laid a complaint against our client. Although the complaint of lack of maintenance on the property was completely unfounded, Mr Eblen succeeded in delaying our eviction matter by three months while the matter went to mediation and thereafter to the Tribunal. Luckily, despite Mr Eblen’s best endeavours to manipulate the procedure, the Tribunal awarded an order in favour of our client for arrear rental and utility payments owed to her. We then proceeded to obtain the eviction order.
Furthermore, the RHA obliges the landlord of a residential property to reduce the terms of the lease to writing if requested to do so by the tenant.
The Rental Housing Amendment Bill was accepted by the National Assembly on 9 September 2014. It was however recalled for argument after just a few days. The main reason for further argument at this stage was that the committee wanted to do away with the term ‘Landlord’ since it is not seen as a gender-neutral term. The term ‘Landowner’ was accepted in the latest version of the bill, but was still under review.
The Amendment Bill will have a significant impact on lease agreements since it would require lease agreements to be in writing if they are to be enforceable. The bill allows for a six-month grace period, from enactment, for landlords to comply with the act. With this in mind, it is advisable to pre-empt the enactment of the RHAB by taking the necessary steps in time to avoid the risk of having to get written agreements signed at the last minute.
Some aspects of the Amendment Bill that could significantly impact on evictions are worth pointing out and include the following:
- The Rental Housing Tribunal would have to refer a matter, where eviction is the only potential outcome, to a competent court within one month. This is a very positive amendment as it would shorten the waiting period before eviction proceedings can be instituted when a matter is pending in the Tribunal;
- The Tribunal will still not have jurisdiction to grant eviction orders;
Arbitrary evictions are criminalised. This has the implication that a landlord that reverts to methods such as lock-out, disconnecting utility supply, taking occupation of the premises with the occupants to get an illegal occupant out of the premises and so on, would not only face a spoliation order, but also criminal charges. When found guilty of this crime a landlord would have a criminal record and could serve a jail sentence of up to a year.
Last time: Why the lease should be signed close to home
Next time: ESTA and PIE, and dealing with tacit agreements
Who is Cilna Steyn?
Cilna Steyn, MD of SSLR Inc, completed her LLB Degree at Unisa, after which she was admitted as an attorney in 2007. She co-founded Steyn & Steyn Attorneys, where she began specialising in evictions.
She regularly presents training sessions, where she advises groups of rental agents and private landlords on matters relating to landlord and tenant disputes and broader scope property law-related matters. She also acts on the panel of experts for the Law Society of South Africa’s Legal Education and Development. She presents seminars on behalf of LSSA: LEAD, educating attorneys nationally on eviction procedures and rental claims. She is one of the drafting attorneys of the TPN (Tenant Profile Network) Residential Lease Pack.
Cilna authored The Landlord’s Guide – Property Rental and Eviction in 2015 and regularly publishes articles in newspapers and peer-review magazines. She also appears on television and radio, participating in discussions relating to property law and, in particular, evictions. As the managing director she is dedicated to leading SSLR Inc in accordance with its core values.
Cilna is passionate about property and understands the pressures of being a landlord. Her attention to detail and knowledge of property law makes for efficient evictions.