Disclaimer: this article is general advice with generalized principles to provide a broader, practical understanding of the various topics discussed during SAPOA’s webinar. For specific issues, our readers are advised to consult with their legal advisors. The views and opinions expressed in this article are those of GVS Law and do not necessarily reflect the official policy or position of Property Wheel and/or SAPOA.
“The relationship between a landlord and a tenant is not only important, but it is the starting point of any lease agreement”.
During a recent webinar hosted by the South African Property Owners Association (SAPOA), Ben Groot, Director at GVS Law, discussed the rights and obligations of landlords during recent times and how lease agreements have never been more pertinent to landlords when dealing with damaged and destroyed property.
As a landlord, your first question may be: “What are my obligations to my tenant(s) and vice versa?“
A lease agreement (in its basic form) is reciprocal in the sense that a landlord must provide a premises and in return for usage of the premises, a tenant pays rent.
While some examples of lease agreements include clauses pertaining to the duty of tenants to maintain their premises, others include clauses allowing landlords to repair damage and to recover the costs if their tenants fail to do so.
Some contracts may also hold tenants liable for security breaches and the associated repair costs while others may include a clause that a tenant may not hold a landlord liable for damages arising from negligence on the part of a contracted security company.
One pertinent lease agreement clause for landlords to note is the ‘Destruction of Premises’ clause:
As in the example above, this clause entitles a landlord to cancel a lease agreement if the property is destroyed or damaged to such an extent that the premises cannot be used for the purposes of the lease agreement. But what constitutes damaged property as ‘substantially untenantable’?
“In my view, these circumstances would be when a tenant cannot conduct business within a premises in its current condition” says Ben.
However, if a premises is damaged but not untenantable, and the repair work may take some time, some leases provide for a rental recession, where the tenant would not be held liable for rent during the period of the repair work – on a pro rata basis – and the landlord would be responsible for assessing and repairing the damage in a timeous manner. While some tenants may try to use this to exit their lease agreements, it is important for landlords to consider including this clause in their lease agreements going forward.
In another example of damaged, untenantable property, a lease agreement may include a provision that seeks to prevent liability on both the landlord’s and the tenant’s part. Normally, the lease agreement would be terminated (and not extended) and the landlord would only be required to refund the tenant’s deposit.
“If you have these types of situations, you need to review the clauses in your lease agreement(s) to see what your obligations are, and you must make sure that you comply with these” says Ben.
“I believe that these are the most important clauses to have in a lease agreement and they need to be reviewed properly before dealing with your tenants in greater detail.”
But what if I do not have a lease agreement in place with my tenant(s)?
In Ben’s view, a landlord should never be in this position, but it does happen.
“If a matter is not governed by legislation, like a lease agreement, then the common law position applies” he says. “This means that a landlord may need to give their tenant(s) undisturbed usage of the premises – an argument that we have dealt with during Covid-19 and subsequently, the civil unrest”.
The legal term for this is ‘commodus usus’ which means that a tenant can utilize the premises for the purposes of the lease agreement with undisturbed usage and surety from the landlord that there will be no interference on his or her part.
Another duty that falls on landlords under common law practice is the shifted responsibility of maintaining the premises.
In general, a tenant has two duties; to use the property with reasonable care and to return the premises to the landlord in the same condition it was let – this excludes fair wear and tear. If a lease agreement is not in place, the tenant may only be held responsible for internal repairs of the premises while the landlord would be required to repair the shopfront etc.
‘Force majeure’ – a clause that tenants have flung around over the past year and often confused with ‘vis major’, is not a formal legal term in South Africa. “The wording of the ‘force majeure’ clause must be in a lease agreement for it to apply – it is not a general principle and normally, lease agreements do not include this clause” notes Ben.
On the other hand, ‘vis major’ is the correct legal term which refers to a superior force or power that cannot be controlled, i.e., an earthquake, floor, or war for example.
“Some lease agreements may include the ‘casus fortuitus’ clause which is an example of ‘vis major’ – an exceptional or extraordinary occurrence not reasonably foreseeable. Covid-19 may be an example of this as no one predicted the pandemic” says Ben. “However, in my view and in the current circumstances, the looting and rioting would not qualify as ‘vis major’ in South Africa where civil rest is reasonably foreseeable in certain areas”.
Permanent or temporary impossibility
‘Force majeure’, ‘vis major’ and ‘casus fortuitus’ all boil down to the theory of impossibility.
There are two types of impossibilities – permanent or temporary:
Permanent impossibility would apply if a lease agreement cannot be honoured and in turn, the contract is terminated i.e., a building is destroyed and untenantable.
Temporary impossibility would apply to a situation where the parties are still able to perform.
“In my view, we are in a temporary impossibility situation with regards to the looting and rioting in the sense that landlords are in a position where they cannot give their tenants full occupation of the premises but once the property has been repaired, the lease agreement continues” says Ben.
“The landlord cannot be forced to provide a premises if a building has been destroyed and similarly, the tenant cannot be forced to pay rent. This goes back to the reciprocal nature of a lease agreement but there are some exclusions”.
If the impossibility duration exceeds the duration of the lease agreement, then the impossibility becomes permanent. For example, the property has been destroyed with the lease agreement set to expire shorty after the damage occurred. If the repair work exceeds the duration of the lease agreement, the contract will be terminated due to permanent impossibility because the relationship between the landlord and tenant was due to end.
“I would caution landlords to send cancellation letters to their defaulting tenants” says Ben. “You need to review each relationship separately but, the destruction of property may be used in appropriate circumstances to cancel a lease agreement. However, it cannot be used to evict a tenant by refusing them access to the property once it has been repaired and/or rebuilt. Landlords need to follow the correct processes upon legal guidance”.
‘Vis major’ is an example of supervening impossibility i.e., the parties have performed the lease agreement up until a point where future performance is impossible. Under common law, ‘vis major’ entitles a tenant to rental remission, an argument made during Covid-19.
“In GVS Law’s view, performance has not been rendered impossible by Covid-19 and the subsequent national lockdown. Tenants were still in occupation of the premises with access – whether they were able to trade or not. In this situation, there is no impossibility which is why ‘vis major’, in our opinion, does not apply to the pandemic”.
“It may be difficult to see where the line is drawn, but in general, there must be a direct immediate link between the conduct, the loss of beneficial use and occupation for a rental remission to apply. However, tenants remain liable for utility charges, rates, and taxes”.
In summary, if there is no lease agreement in place, then the common law principle applies whereby the tenant may be entitled to a rental remission due to ‘vis major’ (pro rata) according to the extent of the lose of usage and the destruction of the premises which may ultimately lead to the termination of the lease agreement if the repair period precedes the remainder of the lease agreement. While the landlord will be responsible for repairing the premises, the tenant would normally be held responsible for only repairing the interior of the premises.
What are my obligations to patrons of my building?
A landlord needs to take the necessary steps to ensure that his or her premises is safe for public use.
According to Ben, there are three questions a landlord should ask when considering on taking steps to prevent harm to patrons of a building:
- Would a reasonable person in the same circumstances have foreseen the possibility of harm to others? I.e., Would your property or centre manager have foreseen that someone might suffer damages due to what is happening?
- Would a reasonable person in the same circumstances have foreseen the possibility of harm to others?
- If so, would that person have taken precautionary steps to prevent the harm? Did the person you are trying to hold liable fail to take these steps?
“Look at the circumstances pertaining to the risk or the harm” says Ben. “Landlords need to look at the bigger picture, even if this means looking at what neighbouring businesses or shopping centres are doing. Factor in what is reasonable under the circumstances and take the necessary, precautionary steps to prevent patrons from suffering any damage”.
Patrons claiming damages from your building will also need to prove five elements in court for delictual liability: conduct, wrongfulness, fault, causation, and actual harm and this is a value judgment by the courts on a case-by-case basis.
Do I have the right to use armed security providers in my building?
A landlord has the right to appoint external service providers, but they need to act with caution when employing the services of a security contractor cautions Ben.
“You need to consider whether there is a risk of danger in the work that the contractor will be doing, specifically with security. As the landlord, you need to make sure to take reasonable steps to ascertain that the security contractor has the reasonable expertise”.
Ben highlights an important case as an example:
“In the matter of Saayman v Visser 2008 5 SA 312, Visser appointed an armed security guard for his residence and before doing so, he ensured that the company was registered and that the security guard had the necessary training. When Mr Saayman was shot on Mr Visser’s premises, Mr Visser was able to avoid liability on the basis that he took reasonable steps to ensure that the appointed contractor had the necessary expertise. The contractor was held liable, not Mr Visser, the owner of the premises”.
But what happens when a security officer injures or kills a tenant, a tenant’s employee, patrons or a rioter or looter? Will the landlord be held liable?
Normally, a landlord would not be held liable if a security provider neglects to perform their duties, says Ben, especially if the security company is an independent contractor. A landlord’s responsibility is limited to ensuring that the security provider is competent, but they have little or no control in how the security provider performs his duties.
As part of a landlord’s due diligences, and before the security appointment is made, you need to check that the security provider is registered with PSiRA.
However, if your employees perform security services, with inadequate training, you are in danger of being held liable.
What are my rights against looters?
“Landlords need to understand their entitlement to use force to prevent damage in a looting situation” says Ben.
There are two situations under these circumstances; the first situation is the ‘act of necessity’, and the second situation is the ‘act of defence’.
For example, if a patron, who is not directly part of the looting, is injured while safeguarding a premises, a court will weigh up the two positions and the harm inflicted, should not outweigh the harm prevented.
“When you act in defence against a looter, as a landlord, you are entitled to use violence or force to protect your own interests and the interests of patrons when there is an immediate threat or infringement, but it must be imminent peril” cautions Ben.
This means that taking the circumstances into consideration, the measures used to avert danger should not be excessive i.e., the nature of the threat, the extent of the threat, the value of the interest threatened, and the likelihood of serious injury.
“Most importantly, the element of force used must be the only reasonable possible of means of averting danger. You need to review all other options first, such as water cannons, warning shots etc.” advises Ben.
It may be difficult to identify all individuals or organisers of a looting incident but if a landlord can identify some of the responsible individuals, then you are entitled to institute action against them under the Regulations of Gatherings Act 205 of 1993 i.e., persons who arrange or organize will then be held liable for the damages caused because of the gathering and the damage that occurs.
What if a looter or rioter is injured on my premises? Will they be able to claim damages from me?
As a landlord, you have a legal duty to ensure that persons are not injured by whatever takes place on your premises (including looters and rioters) and this duty extends to trespassers too.
However, this may be argued – if a looter or rioter is on your premises, they voluntarily assumed the risk of their unlawful actions and because of this, the liability may be excluded. “This is difficult to prove but it is a possible defence on a landlord’s part” says Ben.
In summary, landlords may use force in a dangerous and threatening situation, but it must be used to avert this danger in appropriate circumstances while avoiding excessive means to protect your property, your tenants, and your patrons.
Missed this webinar? View SAPOA’s upcoming Educational, Virtual Trends and Research webinars here.
