Common pitfalls to avoid when writing a residential lease (for landlords)

residential lease

Common pitfalls to avoid when writing a residential lease (for landlords)

Even with all the ups and downs in today’s market, property remains a solid investment if you take the time to seek out the right deal. While owning your own home is a good start, owning rental properties is an even better next step.

But, before you go ahead and sign up your new tenant, make sure you have the right lease in place to avoid any problems that might arise. Although leases are nuanced and complex and there is no one-size-fits-all agreement, any lease can be improved upon by avoiding these four common pitfalls.

 

Agreeing to fix or maintain too much

Simply put, a lease is a contract. Whatever you agree to do in writing, you are responsible for doing. While the Rental Housing Act stipulates certain provisions which are deemed to be part of the lease, agreeing to fix or repair too many things will make you liable to the tenant for the duration of the lease.

 

Asking the tenant to do too much

Most residential leases are subject to the Consumer Protection Act, which applies both to the wording of the lease and the actual obligations. Furthermore, tenants have recourse to the Rental Housing Tribunal to make determinations on unfair practices in lease agreements. Unduly onerous clauses or one-sided clauses that are considered unfair are unenforceable.

 

Not adhering to the law regarding deposits

The Rental Housing Act unambiguously states that a deposit paid by the tenant must be invested by the landlord in an interest-bearing account with a financial institution and the landlord must pay the tenant interest at the rate applicable to such account (which may not be less than the rate applicable to a savings account with a financial institution). Subject to the deduction of the reasonable cost of repairing damage and replacing keys, the landlord must repay the deposit with interest to the tenant, within 14 or 21 days of the end of the lease (depending on the situation).

 

Not reducing rental extensions to writing

The Consumer Protection Act regulates the extension of fixed-term contracts. A landlord must give written notice to a tenant of the pending expiry of a fixed-term agreement not more than 80 business days and not less than 40 business days before the expiry date thereof. The notice must include any material changes to apply in the event of renewal of the lease agreement, as well as any other cancellation or renewal options available to the tenant. If notice is not given, the new month-by-month agreement will be on the old lease agreement terms.

 

The bottom line

Tenants want to rent in places where they feel that the landlord is fair and reasonable, and where the lease agreement provides both parties with clarity on their rights and obligations.

Ensuring that your lease agreement complies with the relevant legislation and is enforceable in the event of a dispute is essential.

Gillian Erasmus
Gillian Erasmus
gillian@erasmuslaw.co.za

Attorney, Notary and Conveyancer LLB, LLM