Lease Agreements

Today we're looking at lease agreements, the different forms they can take and what the essential elements for a lease are. If you'd like to know more about leasing a property, click here.

The definition of a lease:

A lease is a contract between the landlord or duly authorised agent and the tenant that allows the tenant temporary use and enjoyment of the property.

This agreement can be:

• In writing; or

• Parties may orally agree to the terms and conditions of the lease contract; or

• It could be partly written and partly oral.

If you’ve been following me, you’ll know I always advise you to get a written agreement. It’s easier for a dispute to occur with an oral agreement than with a written agreement. You can easily refer back to your written agreement to make sure of the provisions whereas with an oral agreement, you need to rely on memory and it can easily turn into a he-said-she-said situation. It is also harder to prove the terms of an oral agreement should the matter go to court.

Whenever someone asks me a question about their lease, my first question is always: “What does your lease agreement say?”. And whenever I get the reply that it’s an oral agreement, I cringe a little bit. Because more likely than not, you didn’t cover the little things in your oral agreement. And it’s usually the little things that cause the disputes so they truly are important.

The essential elements of a lease:

Regardless of whether the agreement is in writing or concluded orally, the parties must agree on the following (these are known as the essentials of the contract):

1. The property to be occupied;

2. Rental to be paid in respect of the property let;

3. The period for the tenant to have use and enjoyment of the property;

4. The transfer of the right to use and the right of enjoyment to the tenant; and

5. The acceptance of the offer to rent and the transfer of the limited real right.

Let’s rephrase that: There is no lease

• If there is no agreement regarding the exact amount of money to be paid as rental;

• If parties fail to confirm the property that the tenant is to occupy for his/her use and enjoyment; and

• If the lease period is undecided.

Should a tenant request a written lease, the landlord must reduce the lease to writing but on the same terms and conditions of the oral lease. The Rental Housing Act, however, doesn’t afford the same right to the landlord. If the landlord requests the lease to be reduced to writing, the tenant can ignore such a request and this would not be seen as an unfair practice.

Different types of lease agreements:

There are different types of lease agreements, namely:

1. A periodic lease agreement: a periodic lease is defined as “a lease for an undetermined period, subject to notice of termination by either party”. Contrary to its definition, a periodic lease agreement does in fact have a determined period. Without one it would not qualify as a lease agreement. (Remember what we said above about the essentials of a lease agreement). The parties must decide, either expressly or implicitly, whether the period will be a daily, weekly, monthly or yearly lease.

• A long lease: A long lease is a lease for a period of 10 years and longer. In terms of the Formalities in Respect of Land Act 18 of 1969, a long lease must be in writing and registered against the title deed of the leased property and is attested by a notary public. This protects the tenant against eviction from third parties and against creditors or new owners who have no knowledge of the long lease.

Additional requirements for lease:

There are additional requirements that a written lease agreement must include:

• The names of the tenant and the landlord;

• The property to be occupied by the tenant must be described (for example, a house, room, outbuilding, garage);

• The rental to be paid;

• Any reasonable increase in the rental;

• The amount of deposit, if any;

• Any charges (for example, water and electricity payments);

• The lease period (for example, monthly, six months or three years);

• The rental period (for example, monthly, weekly, daily, yearly);

• The duties of the tenant;

• The duties of the landlord; and

• The notice period for terminating the lease if the lease period is not stated.