The Consumer Protection Act has been in effect for a month and a half now and slowly but surely the public are coming to grips with what the CPA does and does not protect as they encounter various situations provided for under the CPA.
We have had a steady stream of questions around how the CPA affects the property sector especially with regard to landlords and tenants, so we have compiled a quick reference guide for your perusal.
Firstly, it must be understood that a rental agreement of any nature is in essence a service as far as the CPA is concerned. That is to say that the landlord is supplying the tenant with the service of the house/office/flat etc. for which the tenant pays an agreed sum for that service. The CPA exists to regulate the supply and/or promotion of goods and services to South African consumers. Every single lease drawn up after April 1, 2011 must comply with the CPA, so you would do well to heed this advice before entering into any agreement going forward.
The contract of the lease must be written in plain language, avoiding complicated and misleading jargon. The contract must be understandable to a person with average literacy skills so that they may fully understand what they are signing. If they do no understand what is written, it must be explained in clear and simple terms. This will get tricky in South Africa, what with us having 11 official languages. This clause implies that the contract should be translated in the language the tenant is fluent in, if it is not the same language as the landlord.
The tenant must be made fully aware of any provision in the contract that transfers risk away from the landlord and onto the tenant. Tennants must be made aware of any risk they undertake at the time of signing and these risks must be acknowledged by the tenant.
Clauses exempting landlords from liability to repair damaged premises due to negligence on the landlords part must be specifically drawn to the attention of the tenant. Such provisions must be in bold and the tenant must sign next to such provisions.
Generally speaking, and as obvious as it sounds, the contract cannot may not contain any clauses or provisions that defeat the ends of the CPA. In the spirit of the CPA, contracts may not be stacked in favour of either party but must be substantively fair. The CPA exists to bring balance and equality in the consumer market and where blatant discrimination occurs with those that possess the power (usually landlords) over those that don’t (usually the tenants) the CPA provides the safety net of legal recourse.
One of the biggest outcries of landlords has been the regulation of contract lengths and renewals. The maximum period of a fixed-term contract has been reduced to two years. There is one exception however, where the landlord can demonstrate that a longer term contract is of greater financial benefit to the tenant. What exactly that benefit should look like whilst still remaining fair to both parties is a subject of debate.
Much like in the case of cell-phone and gym contracts, it is the legal obligation of the landlord to provide notice of the termination of the lease even if the contract is reaching it’s full course on the agreed upon dates. The landlord must provide written notice at least 60 days before termination of a lease. On the flipside, the tenant may at any point cancel the lease giving only 20 business days notice. A landlord may not provide a clause in the lease to exempt them from this risk, it is now every tenant’s legal right. The tenant is still obligated to pay any outstanding amounts owed up to the end of that cancellation period and the landlord may impose a reasonable cancellation penalty. The jury is out as to whether a reasonable cancellation penalty will be comparable to the damages that landlords were previously entitled to recover in such circumstances.
If a landlord decides to take a chance and avoid inclusion of the rights afforded under the CPA especially in these early days when not all consumers may be aware of their rights, they should be aware that they then run the risk of the lease being declared void and unenforceable in smaller cases. For larger cases, failure to comply with the CPA may result in a fine or imprisonment of up to 1 year, or both.
For a glossary of simplified rental terms, view this helpful post by Property 24, and begin your process of CPA compliance or see where you might need to rectify existing contracts.
Leases that were drawn up and signed before 1 April 2011 are still subject, to the CPA, albeit with limited application . If you fear that your existing lease may not be in compliance or you wish to draw up a new contract as a landlord we strongly suggest that you contact your preferred legal advisor in order to ensure compliance with immediate effect.