RESIDENTIAL AND COMMERCIAL LEASE AGREEMENTS AND THE RIGHTS AND OBLIGATIONS OF LANDLORDS AND TENANTS DURING LOCKDOWN
We are living in unprecedented times where many people living in South Africa have lost income, jobs and even lives. In March this year, President Ramaphosa directed a nationwide lockdown in terms of the Disaster Management Act, which was initially intended to be enforced until Thursday, 16 April 2020. It is now 22 May 2020, and we still find ourselves in lockdown, albeit slightly less restricted. There has been much debate by civil society as to whether lockdown has run its course. The purpose of this article, however, is not to question lockdown, but to rather provide guidance to tenants and landlords who find themselves in burdensome situations. Furthermore, this write-up focuses specifically on breach, eviction and the payment of rental in light of COVID-19.
It is no surprise that the majority of tenants who have partially or completely lost income as a result of lockdown are having difficulty paying rent to their landlords. There have been many calls for landlords to either waive rental for the effected months or to temporarily freeze rental, with the tenant to catch up on payments once they are in a position to do so. A lot of onus has essentially been placed on landlords to assist tenants. Regrettably, the aforementioned is easier said than done, as rent payments received by landlords are very often utilised to cover the landlord’s general expenses, including expenses pertaining to the rented premises. Most importantly, however, rental payments received from tenants mostly constitutes income for the landlord, and in many instances, this rental is their only income. The non-payment of rental thus has a domino effect; if the tenant does not pay the landlord, the landlord in turn cannot pay their own expenses, such as, inter alia, debt due to creditors and employees’ salaries (if applicable). Should the landlord’s creditors or employees not receive payment due to them, the domino effect will simply continue until most economic participants cannot meet their payment obligations. This does not mean, however, that in order for the economy to survive, tenants must pay their rent. Where a tenant has lost income or their job for example, paying the entire month’s rent may not be possible. Landlords and tenants should engage and compromise with one another, in such a way that benefits both parties. This is not always possible as there are different facts and circumstances specifically applicable to each tenancy, such as a history of rental defaults by the tenant before the implementation of lockdown.
In the event that parties to a lease agreement cannot reach an amicable solution regarding rental, it is important that they understand their respective rights and obligations in terms of the law and arising from the agreement. These rights and obligations must then be considered in conjunction with the limitations set by the national lockdown. Outlined in this article are various factors, guidelines and procedures which should be considered by both landlords and tenants when exercising any rights or performing any obligations in terms of their lease agreement.