Is this rental clause the answer to many landlords’ prayers?
Hi, why is there a clause in the lease to say the owner can sell at any time during the tenancy? Doesn’t the huur gaat voor koop law protect tenants against this? – Sharon
Hi Sharon, the short answer is that the owner may want to realise an excellent offer for the property but will be inhibited by the huur gaat voor koop prohibition or even a better rental, but would be precluded from interfering in the lease to take advantage thereof.
The owner may also want to try and give himself greater rights than the Consumer Protection Act (CPA) provides, namely an inability to terminate a lease unless there have been 20 business days provided to remedy a breach.
I have been asked many questions about clauses in leases where a landlord seeks to cancel a lease even if the tenant has not breached. The clause I have prepared for a number of agencies is the following: The landlord may cancel this lease on 2 (two) months’ written notice on the following conditions:
the landlord intends to move into the premises; or
the landlord intends to sell the premises.
What is huur gaat voor koop?
In simple terms, it means that a tenant, who has a lease, is protected, even if the property is sold to another person. The sale does not impact on the rights of the tenant to continue its lease until its expiration date. The exception to this is that of a sale in execution by a bank (this is when the bank sells the property because the owner does not pay his bond).
If a purchaser at the sale in execution makes an offer to buy this property, for a price which is less than what the bank requires, the property may be sold without the lease. This is the exception to huur gaat voor koop. My view is that the exception to huur gaat voor koop must not simply be confined to sales in execution.
In our law, one may always curtail one’s common law (rights which are created by case law) rights by way of a contractual agreement unless such an agreement is contra bonis mores (against good morals).
I can see no reason why a clause that entitles a landlord, on reasonable notice, to cancel a lease with a tenant – even if the tenant was not in breach – to be against good morals.
In fact, I think it would be difficult for a tenant to argue same after having initially agreed to the clause in the lease.
There is also no harm in inserting such a clause as the landlord will only be gaining extra rights and if the clause is successfully challenged the landlord will be in no better or worse position than he would be had he not inserted the clause in the first place.
In this case of a lease with my clause mentioned above, the landlord would, in accordance with his contractual right, be able to terminate the lease agreement, prior to the sale of the property. As such there would be no rights and/or obligations that would be passed on to the new owner.
This would of course be different if the sale of the property and passing of rights took place before the landlord cancelled the lease in accordance with the cancellation clause. The only concern that I have is that the CPA recognises that an injustice may be done to a tenant in such a situation – after all, a tenant that pays and does not breach should not simply have his lease terminated, should he?
I think one must accept that if a lease agreement is cancelled by the landlord, the tenant may suffer ancillary damages such as movers’ costs and any costs pertaining to the conclusion of a new lease. Perhaps the clause should seek to prevent such an argument by stating that, in the event of the landlord cancelling the agreement in accordance with the cancellation clause, that it will be liable to pay the tenant a reasonable cancellation fee and specify that amount which the tenant should specifically agree to be a reasonable amount. I would also ensure that this clause is highlighted and that the tenant’s attention is drawn to it specifically and perhaps leave space for an initial of the tenant next to the clause itself.
The lease should also contain a clause that should state that each clause is severable and the remainder thereof will continue to exist and be binding in the event that any clause is held to be otherwise.
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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, contractual, consumer and company law.