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Here’s when an early cancellation penalty is NOT CPA compliant

Fraudsters pretending to be landlords or rental agents are on the rise in the country.

Q

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

A

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, director of Marlon Shevelew and Associates.

Marlon Shevelew, director of Marlon Shevelew and Associates.

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 marlon@marlonshevelew.co.za anytime for more information on these services.

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2 COMMENTS
  • Mervynn 4th June 2017

    Did the cpa change recently regarding early termination of lease agreement on property lease and where can I get it

    • Mariette Steynberg 8th June 2017

      Hi Mervynn, the CPA has not changed. Reasonable Penalties are still up for interpretation on a case by case basis.

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