Here’s when an early cancellation penalty is NOT CPA compliant
We are looking at exiting our lease early due to a complete break down in trust and respect between us and our landlord.
The lease we have in place states the following with regards to early termination:
“Should the tenant cancel the lease at any time of the lease period, the tenant agrees that the landlord will be entitled to charge the tenant with up to a maximum of 3 months of rental that is payable at the time of the tenant cancelling the lease and which the tenant agrees is a fair and reasonable cancellation penalty.”
Regarding the bolded text, is this even Consumer Protection Act (CPA) compliant? Is the landlord’s right to collect penalty fees not only provided if/when he can show that he has taken every reasonable step to re-tenant the property? – Busi
Hi Busi, there is nothing compliant about that clause. Even if hypothetically there was agreement as to a minimum or maximum penalty, the only way for the penalty to be determined is subject to regulation 5 (2) and (3) of the CPA which could only take place once the lease was terminated.
The duty of the landlord to mitigate his loss would remain as well of course and proof of that would need to be provided if required by the tenant.
In my view his purported claim is challengeable, to say the least!
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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.