WHEN CAN A LEASE AGREEMENT BE CANCELED

There can be many reasons for tenants wanting to terminate their lease agreement early — most recently, many tenants faced retrenchments during the Covid pandemic and could no longer afford their rent. On the other hand, landlords can also attempt to cancel the lease agreements early. In both scenarios, if the correct processes are not followed, this can become a legal minefield, especially since the Consumer Protection Act came into operation in 2008.

But, let’s not get ahead of ourselves. Before we dive into the legal do’s and don’ts of canceling a lease, let’s talk about what a lease agreement is...

What exactly is a lease agreement?

If you are renting a space, whether it is a house, storage unit or anything else like that, a rental agreement needs to be set up between the landlord (lessor) and the tenant (lessee). This agreement is a legally binding document that stipulates what is expected of both parties, as well as the period of the lease, and the amount that needs to be paid by the tenant on a monthly basis unless otherwise specified.

What are my legal rights as a tenant?

Pay close attention to the termination of the lease agreement section before signing. However, once you have signed, in general, you will still have the following rights:

1. You have the right to give your landlord 20 business days' notice before vacating the premises.
2. You have to make sure that this notice is given in writing and that your landlord acknowledges it.

You do have to understand that this doesn’t mean that you can walk away scot-free if you choose to end the lease agreement before its stipulated end date. Your landlord may still charge you a small cancellation fee to cover the cost of advertising the house again. Unless the landlord has breached the lease agreement in some way, then you as the tenant will be able to cancel the lease agreement early without being in breach of the contract agreement and won’t have to pay the penalties.

What are my legal requirements and rights as a landlord?

If the landlord has met all the conditions that are stipulated in the lease agreement, then the tenant cannot simply terminate the lease agreement. However, the landlord also has certain rules that they need to follow:

1. They cannot keep the deposit paid by the tenant for any reason unless it has been discussed with the tenant that some of the money could be used for damages.
2. When these damages are repaired, all receipts need to be given to the tenant for them to review to make sure no extra money is being spent or withheld from them.
3. If the tenant vacates the premises before the lease term expires and is found to be in breach of contract, the landlord cannot make up exorbitant figures and charge the tenant unreasonable cancellation fees.

Of course, the landlord also has rights when it comes to renting out their property which, in general, include:

1. They are allowed to demand that the tenant pays the rental amount due to them for the remainder of the agreed-upon tenancy period if the tenant was found to be in breach of contract.
2. They are allowed to invoice them for any loss of income due to the early evacuation of the premises.
3. They are allowed to demand fees for advertising the house if the tenant does not find a replacement tenant before moving out.

The “Breach Clause” and how it serves the landlord?

The tenant is protected by the Consumer Protection Act, however, in the event that Section 14 of the CPA does not apply, the landlord needs to rely on the Breach Clause of the lease agreement to know how and when the lease agreement can be canceled. The lease agreement could have many different clauses and it depends on the severity of the breach of contract to understand how to respond.

Time for a change?

If you think it’s time to make a move or would rather have your property handled by professionals, reach out to the best real estate professionals in the game, your local RE/MAX team! We’re standing by to help you assess or draft your lease agreement to ensure you are well protected and represented.

*Disclaimer: The purpose of this article is to provide generic information. Readers must please seek a professional legal council for actionable legal advice on this topic. RE/MAX of Southern Africa cannot be held liable for any action taken by the reader of this article.