What happens to a tenant when a property is sold and what rights does a tenant have to cancel a standing lease or enforce it?
In typical situations, the lease has precedence over the sale and the clause "huur gaat voor koop" is in force. This means the tenant has a right to remain for the full duration of that lease, says Sunell Afrika, rentals manager for SAProperty.com.
"The conditions of the existing lease do not fall away. If it has not been cancelled, both the tenant and the new landlord are bound by the lease until such time it is renegotiated or expires," she says.
However, the deposit held by the previous landlord must be transferred to the new owner, and must be held in an interest-bearing account in favour of the tenant, and then refunded to the tenant with interest when he or she moves out.
Similarly, in cases where the tenant chooses to move out when the property ownership changes, the conditions of the lease could also prevent him from leaving the new landlord in the lurch and cancelling the lease.
If the tenant does decide to cancel the lease he or she may incur a penalty. Although the Consumer Protection Act (CPA) allows the tenant to cancel, if the landlord is a supplier according to the CPA and lets property as an ordinary course of business, the landlord can charge the tenant a "reasonable" penalty.
"If for any reason, whether on the landlord or tenant's part, the lease is to be cancelled once the property is taken over by the new owner, it must be by mutual consent," says Afrika.
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