Sale of a Rented Property | All You Need To Know

Imagine this scenario – a tenant has been in a rental property for a few years, they’re settled down and positive they can cover the rent for another 5 or 6 years. Then the landlord contacts them – they’ve decided to sell the property!

Fortunately, the South African law makes provision for these scenarios and we’ve made it easy for you to understand the legal position.

Can the Tenant Remain on the Property?

The short answer is yes! While landlords are legally allowed to sell their rental properties to a third party while the property is occupied, the legal principle known as huur gaat voor koop applies. This means that the lease precedes the sale. In another words, the tenant is within their rights to remain on the property for the remainder of the lease period. This principle protects tenants from eviction while the lease stands. The lease will automatically be transferred to the new owner, with all the conditions in the contract remaining the same for the duration of the lease.

Can the Tenant Cancel the Lease?

There are cases where the tenant would prefer to move out of the property under a new landlord. But what are the laws surrounding the cancellation of a lease? Can a tenant cancel a lease without penalty? Well, this depends on two things – the law and the lease agreement.

  1. The Lease Agreement: Many landlords will include a sales provision in their lease to give themselves and their tenants more flexibility. This sales agreement might give the tenant the right to cancel the contract if the property is placed on the market, in which case, the tenant can cancel their contract without breaching it.
  2. The Law: If there is no sales provision in the agreement, the agreement will transfer to the new property owner and the tenant might face a penalty if they cancel the lease. In some cases, the lease agreement will fall under the CPA (consumer protection act), in which case the tenant has various rights when it comes to canceling the lease – you can read about that here.  

Our Advice to Tenants and Landlords

To avoid any unpleasantries during the process of sale or handover, we suggest that the landlords and tenants communicate clearly before and during a sale. This will ensure that both parties are on the same page and that the tenants and new owners know exactly what is expected of them.

If you’re a tenant or a landlord requiring any assistance in the process of a property sale, please don’t hesitate to contact us at [email protected].

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