Ask a lawyer – Can I sign a lease on a property I (almost) own?
I have a situation where a landlord – who has several properties that I rent out on her behalf – wants me to draw up lease agreements for two tenants in a property she has almost bought (transfer has not yet gone through). She is not the owner but she is arrogantly pronouncing “just make it happen”. We have explained to her that legally she is not the owner and we would actually be drawing up a lease without the owner’s consent.
My question is: How much trouble could we get into if we draw up the lease in her name as the owner and transfer does not actually go through, and she does not become the actual owner? What could anyone in reality actually do to us?
If it is the case that your client has concluded a deed of sale with the current owner of the property, which entitles her to occupation at this stage, then you may proceed to draft the lease agreement in accordance with her instructions.
As I am sure you are well aware, it is not unusual for a purchaser of immovable property to take occupation prior to transfer, and that occupation, on that basis, is usually subject to payment of occupational interest/rental. Thus, it may well be the case that your client, as the prospective purchaser, is entitled to exercise control over the property and act as landlord.
If, however, she is not entitled to occupation of the property at this stage, it is simply not possible for her to conclude a lease with the tenants in the absence of express consent of the current owner. Should your client persist, and proceed to do so without due and proper authorisation, her actions may well be construed as fraud, and may render her liable to the current owner for damages.
The other aspect that must be considered in this instance is the “huur gaat voor koop” principle. If the current owner already has a lease in place with the tenants, then she is bound to the terms of that agreement. This would be the case irrespective of whether the lease is written, oral or tacit. Thus, any existing lease would first have to be lawfully terminated before any new agreement can be concluded.
I would therefore suggest advising your client of the above, and the possible legal ramifications of her proposed actions.
On the issue of your agency’s prospective liability, and as you have been contracted to act as your client’s agent, you cannot be held liable for her conduct.
However, and notwithstanding the fact that your agency cannot be held liable, I would still advise that you raise the above mentioned advices with your client and guide her accordingly.
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Who is Marlon Shevelew?
Marlon Shevelew is the director of Marlon Shevelew and Associates Inc, a law firm specialising in rental property, sectional title, contractual, consumer and company law. The firm is the recipient of more than 45 international property law awards. Marlon is the current author of PayProp’s rental documentation and preferred rental property attorney to the Institute of Estate Agents South Africa (IEASA), the Rental Housing Tribunal Western Cape, presenter of the Advanced Residential Property Law Seminar endorsed by the University of Cape Town and the director of the top rental property law firm in the country, according to several international publications. Marlon also created the unique Rental Retainer Club and RentDoc which offers clients affordable legal fees for rental property-related matters. Marlon is contactable on firstname.lastname@example.org anytime for more information on these services.