Tag Archive: pie

Commercial evictions: how a landlord can evict a tenant

PIE does not apply to commercial evictions, but CPA might

Legislation introduced in the last few years gives residential tenants a host of rights, and landowners or landlords must follow very strict procedures to evict tenants. However, the same is not true of commercial tenants. In some case the Consumer Protection Act (CPA) may apply, but if not, the relationship is governed by contract law.

Commercial evictions - Eviction lawyers

Landlord and commercial tenant relationship

South African contract law is derived from the Roman-Dutch law of contract. A contract is defined as an agreement between two or more parties binding them in a legal commitment. It is basically a legal framework that enables individuals or juristic persons (in other words, companies or organisations) to engage in business. They can exchange resources – such as money or their time – in the knowledge that they are protected by a legal agreement that is – or should be – fair to both parties. If one party reneges on their obligations, the other party is safeguarded by law from loss or the consequences of unlawful behaviour.

A commercial lease is a form of contract. It outlines the interests of both landlord and tenant and their duties towards each other. Properly drafted, it should facilitate a harmonious relationship between the two. Unlike residential tenancies, there is no legislation specifically governing commercial leases, so a professionally prepared, written lease is essential for avoiding misunderstanding and disputes. It is the contract as defined above.

Commercial rental is normally charged per square metre, rather than a flat rate for the premises. On top of that, there is usually a cost for the landlord’s operating costs, parking, rates and taxes, body corporate levies and insurance as well as charges based on use for electricity, water, refuse collection and sewerage. These should all be specified in the lease.

Selling the lease

If a tenant moves out without notifying the landlord and sells the lease to a new business, the new tenant is an illegal occupier. A lease is a contract between two named individuals or juristic persons. A lease can be sold, but the contract with the property owner must then be renegotiated and a new lease drawn up. Whether or not this can be done will also depend on the stipulations in the original lease.

Definition of a commercial tenant

Whether or not a tenant is considered commercial is not based on the zoning of the building but on the use of it. So someone who resides in a commercial property is considered a residential tenant and is protected by PIE. By contrast, a commercial occupant is someone who “…does not use buildings and structures as a form of dwelling or shelter”. The commercial occupant could be an organisation or an individual, and the building could be a residential structure. For example, a homeowner may let a cottage on their property to a self-employed consultant to use as an office. Although the cottage is part of a residential holding, the consultant is a commercial tenant because of the way the cottage is used.

Cancellation of a commercial lease

While commercial tenants do not enjoy the level of protection afforded residential tenants by PIE, the landlord must still follow due process. If a landlord wishes to evict a tenant, they must first cancel the lease. This can be done on expiry of the lease or on the occasion of a material breach of the terms of the agreement (usually rent arrears).

Consumer Protection Act

In some instances a commercial tenant may be protected by the Consumer Protection Act (CPA). If there is a fixed term lease, Section 14 of the CPA applies. In this scenario the landlord must give 20 business days’ written notice of a breach of the lease agreement. They may then only cancel the lease if the tenant fails to rectify the breach within the 20 days.

Section 14 does not apply in the following situations:

  • If the tenant is an organ of State (municipality, state department etc.)
  • If the landlord and tenant are both juristic persons
  • Once-off leases
  • If the tenant is a juristic person with an income/turnover above R2 million per year

In these circumstances 20 business days’ notice of a breach is not required before being able to cancel the lease.

Eviction process for a commercial tenant

Commercial evictions are handled either by the High Court or the Magistrate’s Court. The case is brought by way of action or application proceedings in the High Court and by way of action proceedings in the Magistrate’s Court. The choice of court is usually determined by the lease agreement, with the jurisdiction of the Magistrate’s Court the most common. The lease agreement must first be cancelled, as discussed above, before an eviction proceeding can be brought.

Generally, commercial evictions are effected speedily. The issues surrounding residential evictions – the rights of the occupier to a dwelling and the wellbeing of vulnerable individuals – are not at stake. By contrast, in the business context the rights of the property owner to protect commercial income take priority. But this highlights the need for a rock-solid lease to be in place. This provides the legal framework within which the eviction can take place.

Commercial evictions do not only involve the removal of the tenant. Landlords have a right to claim any damages that may apply at the time of eviction, as well as rent arrears.

Who can evict?

It is worth noting that in a commercial eviction the official landlord may not necessarily be the property owner. Commercial property is often owned by a juristic person such as a large corporation or a pension fund. Therefore an agent can act as applicant in an eviction case, as long as they can prove they have the right to appear in court on behalf of the owner (this is known in law as “locus standi”).

Landlord’s hypothec – the right to repossess tenant’s equipment

A commercial tenant does not have the same attachment to a property as a residential tenant. They still have somewhere to sleep at night, and it is not that difficult to find an alternative location for a business. For that reason, there is a greater risk that a commercial tenant might abscond when the notice to quit is served. Rather than pay the outstanding rent, the tenant might just take their moveable property and run. After all, they are not losing their home.

If a landlord is concerned that the commercial tenant might do a midnight flit, an urgent application can be brought before the Court to allow the landlord to attach and secure the movable goods on the property. If the tenant then removes them it is a criminal offence.

The security a landlord holds over a tenant’s property is known as the hypothec and is actually the strongest form of security in South African law. However, once the movable goods are removed from the property the landlord has no security over or rights to those goods. Therefore if there is reason to suspect a tenant might beat a hasty retreat, the landlord must apply for the attachment of the goods urgently. This is best done with the help of an experienced attorney.

Business rescue

Occasionally a landlord might not be able to commence the eviction process, even if the tenant is in breach of the lease. A business that has fallen on hard times may enter Business Rescue. This is a process that allows a business in financial distress time for rehabilitation. During this period there is a moratorium on all legal action, so an eviction notice may not be served.

What happens if the premises are sold?

There is a principle in South African law, derived from Roman-Dutch law, called “huur gaat voor koop“, which translates as “only the lease and nothing more”. What this means for the tenant is that, in the event of a sale of the building leased by the tenant, the purchaser is obliged to honour the lease agreement. The tenant may continue to occupy the building, or their part of it, according to the terms of the lease. The tenant’s rights in this situation are stronger than the right of ownership. However, the tenant should be alert to the fact that the new owner may not wish to renew the lease, depending on their plans for the property. So a wise tenant will be on the look-out for new premises well in advance of their lease expiry.

Professional help is essential

Whether you are a commercial tenant or landlord, it’s important to have a carefully drafted lease that includes all your requirements and conditions. If both parties know exactly who is responsible for what, conflict is less likely to occur. This includes the terms of renewal, which are often left open-ended in commercial leases and can be a cause for dispute as the end of the lease period draws near. Simon Dippenaar & Associates, Inc. in Cape Town and Gauteng is a law firm of evictions specialists with extensive experience in property law. They can ensure your lease is a sound business contract that will protect you, landlord or tenant. Contact Simon on 086 099 5146 or email sdippenaar@sdlaw.co.za.

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Eviction Law – Changes

Eviction Law Changes - Eviction Lawyers South Africa

How Constitutional law is transforming eviction law

Eviction | The Constitution is the backbone of society and South Africa is fortunate to have “the most admirable Constitution in the history of the world,” according to Harvard law scholar Cass Sunstein. Our Constitution is unique in that it includes “positive rights” which require the State to enact policies that minimise inequality, free South Africans from discrimination and redress historical inequalities. Any legislation that contradicts the Constitution is deemed invalid.

The lie of the land

In terms of eviction law, these Constitutional principles are being applied by the Courts in an attempt to strike a balance between the rights of landowners and the rights of the landless.

Section 26(3) of the Constitution states that “no one may be evicted from their home, or have their home demolished, without an order of court made after considering all the relevant circumstances. No legislation may permit arbitrary evictions.” Section 26(1) of the Constitution further provides for everyone’s right “to access to adequate housing” and sets out the State’s obligation to ensure this right is upheld (Section 26(1).

Clearly it is residential evictions, regulated by The Prevention of Illegal Eviction from and Unlawful Occupation of Land Act (PIE), and the rights of landowners that are most affected by the implementation of these Constitutional principles. Read more about PIE here.

So, although section 26(3) of the Constitution has not amended our common law, it does mandate legislation that impacts the common law rights of landowners. In addition, the Courts tend to place a greater burden on the applicant-owner where the State is the applicant.

Burden of proof

A landowner must prove ownership by producing title deeds for the property and must show that the defendant is occupying his property to ensure eviction. This is known as rei vindicatio. The onus then falls to the defendant to prove he has a valid right to occupation.

Majority of disputes about day-to-day tenancy

While changes to legislation have indeed contributed to greater social justice, there have been some negative side effects, such as the reluctance of landowners to provide housing for their labourers, uncontrolled squatting and an influx of rural residents into urban areas, with the associated health and safety hazards of overcrowding. But it is day-to-day tenancy issues and the maintenance of property values that comprise the vast majority of disputes, rather than the extreme cases of large-scale land invasions and the plight of the homeless.

Navigating your way through an eviction

Eviction law has developed significantly over the last few years and some procedures have changed because of the Consumer Protection Act. Recent cases also indicate that the same procedures must be followed in both the Magistrate’s Court and the High Court. Navigating your way through an eviction and making sure you follow the correct process can be daunting. So, whether you’re a tenant or a landlord, don’t try to go it alone.

We can help

At SD Law & Associates we are specialists in property law. Let us help you with the eviction process or other property matter. Contact Simon on 086 099 5146 or email sdippenaar@sdlaw.co.za.

 

Further reading

How to move back into your property

Served with a protection order? 

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Eviction process challenged in court – the PIE gets teeth

Eviction process challenged in court

Court ruling suggests more active judicial management of the eviction process

Eviction process – Property owners and tenants alike have rights under South African law; and when an eviction notice has to be served, it is important to consider the rights (and responsibilities) of both parties, to be sure that fair and just treatment is accorded to everyone. Our Constitution exists to protect all citizens and ensure a rights-based approach is taken in matters of legal dispute. An eviction notice that came before the Constitutional Court last year provides a test case for the accountability of housing lawyers and the judicial system in safeguarding the rights of the most vulnerable in our society.

In the the case of Occupiers of Erven 87 & 88 Berea v De Wet, Christiaan Frederick N.O. and Another, appeal was made under the PIE Act to the ConCourt after the High Court refused to rescind an eviction order. Here we look at the facts of the case and draw some conclusions from the judgement.

 

History of the eviction notice

An abandoned block of flats in Berea, Johannesburg, was purchased by a new owner following liquidation of the former landlord. The building was occupied by 184 residents at the time, some for as long as 25 years. In order to carry out renovations and restore the building to residential letting standards, the purchaser wished to evict the sitting tenants and served them with an eviction notice, following the procedures set out in PIE.

The 184 occupiers were represented in court by four of their peers, who were known as the “Appearer Occupiers”. These Appearer Occupiers asked the court for a postponement of the hearing to give them time to seek legal advice and representation. However, when they appeared in the High Court, they consented to a draft eviction order, leaving the remaining 180 occupiers somewhat stunned. The occupiers sought their own legal advice and applied to the High Court to have the eviction order rescinded. The High Court turned down the application, on the basis that the eviction notice was not in contravention of PIE and the eviction court had discharged its duties faithfully.

A further application for leave to appeal was refused by the High Court and the Supreme Court of Appeal.

 

What happened next?

The case was based on a series of misunderstandings. The Appearer Occupiers said they had not consented to an eviction order. They argued that even if they had consented, their consent was not legally valid; and the court had an obligation to ensure the fairness of any eviction order in the light of all relevant circumstances. They maintained that the eviction order should have been rescinded.

The Respondents argued that the applicants had lost the right to appeal because they had agreed to the eviction order in the first place. They also said there was no evidence that the occupiers would be made homeless or that they had made any attempts to find alternative accommodation. Therefore the eviction process was fair and an appeal was not warranted.

 

What did the judges consider?

The Constitutional Court reviewed the judicial oversight functions of the eviction courts under PIE. How great a duty does an eviction court have in determining the validity of the mandate between the occupiers and their representatives? How far should the eviction court go to ensure the consent is legitimate? In this case, were the non-Appearer Occupiers within their rights to request the eviction order to be rescinded?

 

The ConCourt decision

The Constitutional Court ruled that where legal representatives consent to judgements without proper authority, the judgement is not valid. In other words, the Appearer Occupiers in this case knew the main body of occupiers needed time to seek legal representation, but the Appearer Occupiers did not allow for this in the eviction process. In the face of the resulting eviction order, the occupiers “had no legal representation when the order was obtained against them,” according to the Court. The Court also held that the occupiers’ consent to the eviction order should have been given “freely and voluntarily with the full awareness of the rights being waived,” and this did not occur. The occupiers were not aware of their rights and therefore the consent they gave to the postponement could not be considered informed consent in the light of the eviction order. Informed consent is a guiding principle of the Constitution. As a result, the Appearer Occupiers’ consent was not binding on the occupiers.

 

Conclusion

The ConCourt judgement raises some interesting questions and may signal a new role for the courts in matters of eviction. It reinforces the function of the courts in protecting the poor and vulnerable in our society. This case places an increased burden on the courts and property owners, the latter now having to ensure a legally valid and binding mandate exists before Appearer Occupiers can enter into court-ordered agreements.

The courts may now have to scrutinise eviction applications carefully to prevent any ambiguities between Appearer Occupiers and the occupiers they represent when resisting an eviction application. This would seem to be a victory for social justice; with this judgement the Constitutional Court is refining its stance on active judicial management of eviction applications. Whether this leads to fairer, more just outcomes for all parties or simply brings the process to a grinding halt remains to be seen.

 

Need help with an eviction notice?

If you are a landlord facing litigation be aware that the courts will be more rigorous in exercising their judicial functions. We act for both landlords and tenants and know the challenges faced by both parties. Visit Eviction Specialists

We have an intimate knowledge of the legislation from both sides, so if you need help navigating the eviction process, whether as landlord or tenant, call us now on 087 550 2740 or contact us.

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