Posted by
WKH
on 24 Mar 22
Categories:
Renting
DEFINITION OF A LEASE
A lease is a reciprocal agreement in terms of which one party, the lessor, undertakes to confer (transfer) upon another party, the lessee, the temporary use, and enjoyment of a particular thing in exchange for a counter-performance (payment for rent).
THE ESSENTIALS OF LEASE AGREEMENTS
Apart from the general formalities that a lease has to comply with, the parties must reach consensus on three further aspects, namely:
(a)the leased property – any movable, immovable, corporeal or incorporeal available on the market may be leased. The parties must agree as to the subject matter of the contract. The object must be determined or determinable at the time the contract is concluded. If the description of the object is not clear enough to identify it, the contract will be void;
(b)that the use and enjoyment of such a property be conferred only temporarily - the period of lease must be temporary. The lease agreement period can be indefinite, where either of the parties can terminate the agreement with the necessary notice. The lease agreement can also be for a specific period; and
(c)the nature and extent of the counter-performance i.e “the rent amount” to be paid - the landlord and tenant must agree on a determinable amount for rent, a formular to determine the rent payable, or agree on a third person to determine the amount rent payable. The rent must be payable in money, or in the case of land, as a share of the fruits or produce of the property so leased.
There are generally two types of leases, long leases and short leases. A lease under 10 years is regarded as a short lease whereas long leases run from 10 years sometimes even going up to 99 years.
Leases need not be in writing, however, it is highly recommended that the lease agreement be reduced to writing in order to ensure proper protection for both landlord and tenant.
FORMALITIES IN RESPECT OF LEASE AGREEMENTS
A written lease agreement has to contain certain specific clausesto ensure both parties are aware of their rights and obligations, these include:
1. Must contain the names and addresses of the parties
2. Proper description of the property
3. Rental amount - when it is payable and the reasonable escalation thereof
4. Additional costs that the tenant is responsible for
5. The frequency of payments
6. The exact deposit amount and if same will be invested and whether the tenant will be entitled to the interest
7. An indication of the lease period
8. Written condition of the state of the property
9. The party responsible for the maintenance of the property
10. The lessee’s duty to restore the leased premises to the lessor on termination of the lease
11. The notice period for termination by either party
12. General rules regarding the use of the premises
13. Sub-letting and cession
14. Necessary addendum regarding furniture
DUTIES OF THE LESSOR
-The lessor has the duty to deliver the property, he must thus place the property at the lessee’s disposal so that the latter can use and enjoy it.
-Lessor has the duty to disclose all the material defects relating to the property.
-Refund any advance payment made by the Tenant if he had made such payment before the Order for vacating the said premises is passed.
-To put and keep the leased property in proper condition.
DUTIES OF THE LESSEE
-the duty to pay rent.
-the duty to use the property in a proper manner and for the purpose of the lease.
-The duty to restore the property on termination of the lease.
-Lessee shall not sublet sub-let the leased premises without the prior consent of the landlord.
PAYMENT OF DEPOSITS BY THE TENANT
The Rents Ordinance 13 of 1977, specifically Section 25(2) makes it a precondition for a landlord to request for and receive a deposit from a tenant, a deposit not exceeding an amount equal to half of one month’s rent, in respect of any damage to the leased premises or any loss of keys for which the lessee may become liable.
The deposit shall be clearly specified as such in the receipt issued for payment and be invested with a building society in such manner as the landlord may deem fit (proof of which investment shall on demand be furnished to an inspector).
Accordingly at the expiration of the lease agreement, the deposit shall be refunded by the landlord to the tenant when the tenant vacates the leased premises, together with interest thereon at the same rate as that earned from time to time on deposit, less the actual amount of the damage to the leased premises and the actual cost of replacing lost keys, whatever the case may be, for which the tenant is liable.
PAYMENT OF ESTATE AGENT’S COMMISSION
Standard practice is that the owner of the property pays the commission, the estate agent may thus not retain the rental deposit. The deposit and/or the remainder thereof is pay back to the tenant after deducting expenses in respect of damages and repairs, whatever the case may be.