Section 5(1)(a) of the Consumer Protection Act No. 68 of 2008 (the “CPA”) states that the CPA applies to every transaction occurring within the Republic of South Africa. The word “transaction” is in turn defined as an agreement between parties for the supply of goods and/or services for consideration.
The question which follows is whether an Agreement of Lease can be regarded as a consumer agreement for purposes of the CPA? Is a lessee a consumer, and is a lessor a supplier? The answer to the aforementioned question is yes, with regards to both a lessee and a lessor.
The CPA provides for the expiry and renewal of fixed-term agreements, which includes an Agreement of Lease, and thus qualifies a lessee as a consumer and a lessor as a supplier.
Which aspects of my Agreement of Lease are affected by the CPA?
The most notable aspect of an Agreement of Lease that is affected by the application of the CPA is the notice periods to be given in relation to the cancellation of fixed-term agreements.
A fixed term agreement, which includes an Agreement of Lease, is for a specified period of time and indicates a commencement as well as a termination date for the agreement, thus qualifying it as a “fixed term” agreement. Section 14(2)(b) of the CPA states that, despite any contrary provision in the Agreement of Lease, the consumer (lessee) may cancel the Agreement of Lease at any time by giving the supplier (lessor) 20 (twenty) business days’ written notice, without any type of breach of the Agreement of Lease being required.
Section 14(2)(b) of the CPA further advises on the procedure to be followed by the supplier should there be a breach of the Agreement of Lease by the consumer.
It states that the supplier is entitled to cancel the Agreement of Lease 20 business days after giving the consumer notice of his/her breach of the Agreement of Lease, unless the consumer remedies his/her breach within the given 20 business days. Should the consumer remedy his/her breach within the given 20 business days, the Agreement of Lease will continue to exist and cannot be unilaterally cancelled by the supplier.
A failure to follow these notice procedures could have far-reaching effects, as was seen in the case of Transcend Residential Property Fund Limited v Mati and Others briefly discussed below.
Transcend Residential Property Fund v Mati.
In the above-mentioned case, the consumer was given notice by the supplier of the fact that he was arrear in rental, and should the consumer fail to pay such arrears within 7 (seven) days of receiving such notice, the supplier would be entitled to cancel the Agreement of Lease.
The supplier, however, waited exactly 20 business days before notifying the consumer of its election to cancel the Agreement of Lease, which the supplier at that stage was entitled to do as the consumer did not remedy his breach within 20 business days.
The consumer disputed the validity of the cancellation on the basis that the notice initially given indicated 7 (seven) days within which to remedy his breach, which should in fact have been 20 business days as prescribed by the CPA.
The court held that there is no requirement that the consumer needed to be notified of the 20 business days within which to remedy his breach, but merely that a breach has been committed by the consumer that must be remedied.
The court held further that, because the letter of cancellation was delivered after the 20 business days elapsed, it ensured that all statutory requirements were complied with. The court thus held that the Agreement of Lease was validly cancelled and ordered the eviction of the consumer.
It can be noted from this case that, although the incorrect time frame was given within which to remedy the breach, and in fact that no indication of a time frame within which to remedy the breach need be indicated, notice of the actual breach of the Agreement of Lease remains a requirement, after which the 20 business days will start to run within which the consumer must remedy such breach.
It remains, furthermore, a requirement to wait until the full 20 business days has elapsed before validly cancelling the Agreement of Lease by way of a cancellation letter. Thus, as long as the statutory requirements are practically adhered to by firstly giving the consumer notice of the breach, and secondly, waiting 20 business days before delivering a letter cancelling the Agreement of Lease, the cancellation of the Agreement of Lease will be valid, whereafter eviction proceedings may be instituted.
An Agreement of Lease is subject to the provisions of the CPA and, therefore, the relevant sections referring to fixed-term agreements between a consumer and a supplier must be adhered to, with special reference to notice periods with regards to the cancellation of an Agreement of Lease by the consumer or the supplier.
With regards to the consumer, he/she is entitled to cancel the Agreement of Lease by giving the supplier 20 business days’ written notice. With regards to the supplier, it is imperative that notice be given to the consumer of his/her breach of the Agreement of Lease, and only electing to cancel the Agreement of Lease should the consumer fail to remedy any breach within the 20 business days as prescribed by the CPA.
Make sure your eviction process is legal
Evictions are never easy and should always be seen as a last resort, always try to come to terms with your tenant before moving into the legal process of eviction. If however, you feel like you have no choice, it is best t contact a professional eviction lawyer who can guide you through the process of a residential eviction.