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Can You Terminate A Fixed Term Lease Agreement Prematurely? If So, What Consequences Can A Tenant Potentially Face?

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Can You Terminate A Fixed Term Lease Agreement Prematurely? If So, What Consequences Can A Tenant Potentially Face?

15th January 2018

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In today’s times, many individuals (hereinafter referred to as “tenants”) are desperate to secure accommodation and/or living space for various reasons, and often enter into fixed term lease agreements without reading all the necessary clauses contained therein. 

Disputes often arise between tenants and landlords when tenants move out before the agreed fixed term period.

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It is important for tenants to be aware that unforeseen circumstances could arise at any time, such as the need for them to relocate for a job and it is vitally important for a tenant to know what his or her rights are, in respect of premature termination.

In South Africa, the rights of tenants and landlords are governed by the Rental Housing Act 50 of 1999, as amended (hereinafter referred to as the “Rental Housing Act”), as well as the Consumer Protection Act 68 of 2008, as amended (hereinafter referred to as the “CPA”).

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Premature termination of a fixed term lease agreement will be briefly discussed and summarised in this article, as well as the potential consequences that a tenant might face.

Can a tenant terminate a fixed term lease agreement prematurely?

Yes, a tenant may terminate a fixed term lease agreement prematurely.

The CPA, promulgated to protect consumers from suppliers, also applies to lease agreements and offers protection to both tenants and? landlords.

In terms of Section 14 (2) (b) of the CPA, despite any provision of the lease agreement to the contrary, a tenant may cancel the agreement concerned:

-  any other time, by giving the landlord? 20 business days’ notice in
writing or other recorded manner and form, subject to subsection
(3)(a) and (b).

Possible consequences that a tenant may face because of premature termination of a fixed term lease agreement

Despite, a tenant being able to terminate prematurely, he/she might still need to face potential consequence, such as losing deposits or paying penalties.

In accordance with Section 5 (3)(n) of the Rental Housing Act, a tenant can vacate a premise before expiration of a lease, with or without notice to the landlord.

If without notice, the lease will be deemed to have expired on the date that the landlord established that the tenant had vacated the dwelling, the landlord retains all his or her rights arising from the tenant’s breach of the lease.

Further, In terms of Section (3)(a) and (b) of the CPA:

(a) the tenant remains liable to the landlord for any amounts owed to the landlord in
terms of that agreement up to the date of cancellation/termination; and

(b) the landlord,

(i) may impose a reasonable cancellation penalty with respect to any goods supplied, services provided, or discounts granted, to the tenant in
contemplation of the agreement enduring for its intended fixed term, if
any.

Conclusion

The Rental Housing Act and CPA offers protection for tenants from landlords and it is important for tenants to know what their rights are.

Tenants may terminate a fixed term lease agreement at any time, even if there is no cancellation clause, by giving the landlord the required 20 days’ notice.

However, it is strongly recommended that tenants approach their respective landlords and discuss premature termination in a friendly and professional manner to avoid unnecessary disputes.

If approached in a correct manner, the landlord may also accept premature termination and not impose penalties, should unforeseen circumstance, arise for the tenant concerned.

Written by Shannon Vengadajellum, SchoemanLaw Inc.

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