Unit 4: The Content and Nature of the Lessee s Rights

Transcription

1 Lecture Notes and Activities SECTION B Unit 4: The Content and Nature of the Lessee s Rights 1. Subletting Study pp W.E. Cooper in his textbook referred to under the heading LITERATURE describes a sublease as a contract whereby a lessee lets property which he has hired. Such a contract (in which the lessee is the lessor and the sublessee the lessee) has the same elements and gives rise to the same rights and obligations as a lease. If the parties did not agree otherwise in their contract, the lessee is entitled to sublet anything that has been let. There is an exception to this rule in respect of rural tenements. In terms of the Placaet of 26 September 1658, these tenements cannot be sublet without the written consent of the lessor. Furthermore, the proposed sublessee must not be a person to whom the original lessor could reasonably object. A sublease does not create any contractual relationship whatsoever between the original lessor and the sublessee. Because the sublessee s continued occupation of the thing is dependant on the original lessee s title to the thing, once the original lease is terminated, the sublessee can be evicted, subject to the statutory protection afforded by the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of Subletting in breach of a prohibition is a material breach of the terms of the lease and entitles the lessor to terminate the lease even in the absence of a cancellation clause.

2 2. Cession Study pp In the case of cession, the lessee (cedent) transfers the rights he has towards the lessor to the cessionary. The cessionary becomes the new creditor in the place of the lessee but since only rights and no obligations are transferred by cession, the cessionary does not become debtor in the place of the lessee. The lessee thus retains his obligations in terms of the lease. Except if the parties agreed otherwise, the lessee of property other than rural property can freely cede his rights. A lessee of rural property must obtain the written consent from the lessor, otherwise the cession is null and void. If the lessee were to act in conflict with a prohibition on cession, it will probably be regarded as a material breach of the lease. 3. Assignment Study p The lessee can by means of delegation, transfer the obligations he has in terms of the lease to a third person. Delegation requires an agreement between the debtor (lessee), the creditor (lessor) and the person to whom the duties are to be transferred. The third party then becomes debtor in the place of the lessee. Usually, however, not only obligations but also rights are transferred. Such a simultaneous delegation and cession is known as assignment. The effect thereof is that the person to whom the rights and obligations are transferred (the assignee) becomes the debtor and creditor of the lessor, while the relationship between the lessor and the original lessee comes to an end. Since an assignment always involves a delegation, it can never take place without the concurrence of the lessor. (See Simon NO v Air Operations of Europe AB and Others 1999 (1) SA 217 (SCA)).

3 Assignment can only take place by means of a novation of debt contract whereto the lessor (creditor), the lessee (debtor) and the third party are parties. Assignment can thus not, like in the case of cession, take place without the co-operation of the lessor. 4. The lessee s relation with successors of the lessor: huur gaat voor koop Study pp and Genna-Wae Properties (Pty) Ltd v Medio-Tronics (Natal) (Pty) Ltd 1995 (2) SA 926 (A). In terms of a lease contract, a lessee obtains a legal claim against the lessor whereby he can amongst others claim the use and enjoyment of the property let of the lessor. If the lessor is not able to provide this to him because he for instance has sold the property, the lessee may issue summons against him on the grounds of breach of contract. The lessee may, however, not hold the new owner liable for the provision of the use and enjoyment of the property let. If the lessee already has the enjoyment and use of the property let, the new owner may deprive him of this on the grounds of his newly obtained right of ownership by means of the rei vindicatio. An important exception to the above-mentioned explanation of the lessee s legal position in respect of the letting and hiring of land and buildings is contained in the huur gaat voor koop (the words mean: hire takes precedence over purchase) rule. According to this rule, the new owner becomes the lessor in the place of the previous owner and he is amongst others obliged to allow the lessee to use and enjoy the land or building. The protection which a lessee under a long lease enjoys against successors and creditors of the lessor is laid down by the Formalities in respect Leases of Land Act 18 of This Act determines that a long-term lessee of land is protected for the full term of the lease if: (a) the lease is registered against the title deed of the property let, and (b) he knew of the lease either at the time when he entered into the transaction in terms of which he later acquired a real right in the property let or at the time when he acquired the real right. The authors of your prescribed textbook point out that protection for the full term of the lease is also offered against any gratuitous successor of the lessor.

4 A long-term lessee who does not qualify for the protection provided by the abovementioned Act is protected for a maximum of ten years against onerous successors and creditors of the lessor if he is in occupation of the property that has been let. A lessee for less than ten years (short-term lessee) is not protected by legislation in South African law. In terms of the 'huur gaat voor koop rule, he is however protected for the full term of the lease if: (a) he is in occupation of the property let, or (b) the successor or creditor knew of the lease when he entered into his contract with the lessor or when he acquired his real right in the property; or (c) the successor or creditor of the lessor acquired his real right in the property gratuitously. In cases where the huur gaat voor koop rule holds, the new owner becomes the lessor in the place of the original lessor. He thus obtains all the rights and obligations which the previous owner had in his capacity as lessor. As soon as the land is registered in the name of the new owner, he may claim rent from the lessee. In Genna-Wae Properties (Pty) Ltd v Medio-Tronics (Natal) (Pty) Ltd 1995 (2) SA 926 (A) it was confirmed that both the new owner and the lessee are bound by the lease, and that the lessee does not have a right of election to resile therefrom. The new owner is, however, not bound to all the clauses contained in the lease: The huur gaat voor koop rule does not apply to stipulations that can be separated from the lease; for instance the new owner is not bound to a clause in the lease whereby the previous owner undertook to buy the proceeds of the land, for instance harvests and which was clearly intended to bind only him as original lessor. The new owner is also not bound to an option to buy the land which the previous owner granted to the lessee. (In Spearhead Property Holdings (Pty) Ltd v E & D Motors (Pty) Ltd [2009] 4 All SA 417 (SCA) the court pointed out that a purchaser would be bound if it had knowledge of the option to purchase at the time of its purchase, but this was by virtue of the doctrine of notice and not of the huur gaat voor koop rule.). The new owner is, however, bound to an option to extend the lease. The huur gaat voor koop rule does not apply when the property let is expropriated. Furthermore, it is only applicable to the letting and hiring of land and buildings.

5 5. The nature of the lessee s right Read pp Activity 1 1. Name the exceptions to the general rule that a lessee is entitled to sublet the property that has been let. 2. Briefly distinguish between cession, delegation and assignment. 3. With reference to relevant case law, discuss the legal position where the property that has been let is alienated and transferred to a third person under circumstances in which the lessee is protected by legislative provisions or the huur gaat voor koop rule.