The Rental Housing Act prescribes the manner in which a rental deposit should be dealt with on termination of the lease agreement. It is required that an exit inspection be arranged within seven days after the tenant vacate the property. Should one of the parties fail to attend the arranged inspection, the other party is allowed to proceed to inspect the property on their own and compile a list of damages caused to the property. This list will then be sufficient proof to deduct such damages from the deposit. These damages are quantified, usually by obtaining quotations from two or three service providers, and deducted from the deposit. The remainder of the deposit must then be refunded to the tenant within fourteen days.

The situation often arises where a lease agreement is concluded and a legally binding contract comes into being, the deposit is paid, but shortly before the lessee can take occupation of the property the lease agreement is cancelled by the lessee. The question in this situation is, who is entitled to the deposit? Unfortunately the answer will differ from case to case and each situation should be evaluated individually. In the first scenario the lessee cancels the agreement at such a time that the landlord cannot secure a new tenant, which will result in a loss of income. In this case the landlord will have the right to receive, at least the deposit, as a reasonable cancelation penalty, as contemplated in the Consumer Protection Act since he reserved the property for that lessee. If there was an estate agent who placed the lessee, the estate agent will be allowed to receive commission for the placement. This might not be a full placement fee, but a reasonable fee to compensate the agent for the services rendered.

The second scenario will be where the landlord is able to secure a new tenant in time and will not suffer any damages. In a case like this the landlord are not entitled to receive the deposit or a part thereof since no damages were suffered and there is no need to receive any compensation. Should the landlord withhold the deposit or part thereof in a case like this, it will be undue enrichment. If however, an estate agent was involved and commission is payable, the estate agent is allowed to receive commission which may be subtracted from the deposit. If the landlord paid the commission for the placement to the agent the landlord will be allowed to receive the amount paid to the estate agent from the deposit. The remainder, if any, of the deposit will have to be refunded to the tenant.

Effect of a sale on the mandate

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The effect of a sale on a management mandate agreement Is the purchaser of a property with a tenant in the premises duty-bound to perform in terms of the former landlord’s obligations towards the lease agreement, or in terms of a mandate in the case of a management mandate agreement? The lease agreement remains in […]

Court Dates

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RHA vs huur gaat voor koop

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 Does Section 4(5)(c) of the Rental Housing Act contradict the principle of huur gaat voor koop? The legal principle of huur gaat voor koop was established within Roman Dutch Law and has, since the adoption of Roman Dutch Law as the foundation of the South African legal system, been one of the cornerstone principles governing property […]

Property Rental – Level 3

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Why were these regulations declared unconstitutional by the High Court? What does this mean? On 2 June 2020 the High Court handed down a judgement in the matter of De Beer v COTGA. News of this judgement spread in the media and on social media like wildfire, with headings like “Lockdown Regulations Unconstitutional”; as much […]

Evictions During Level 4

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LEVEL 4 REGULATIONS ON EVICTIONS The Alert Level 4 Regulations were released to the public explaining exactly what Level 4 will entail for the South African public. One of the regulations, specifically Regulation 19, deals with the prohibition of evictions and has a big effect on our property industry. The Regulation reads as follows: A […]

Withholding Rent During Lockdown?

Withholding Rent During Lockdown?

No regulations of any kind have been implemented to authorise tenants to refrain from paying rent. The global pandemic brought about by the COVID-19 virus has thrust South Africa into one of the most unfamiliar and uncertain times in our history, the likes of which never before experienced. Government has, in response to the virus, […]

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