Property Management news


Subscribe to industry newsletters

Press offices

Enquire about a press office
Bizcommunity has over 400 industry contributors and we always welcome further contributions and contributors.
Advertise with us
Advertise & RatesMy Account
Company press officeList company
Recruitment packagesSubmit job ad
Download ratecard
Property Management news

SA legislation protects tenant when property is sold

15 Nov 2012 07:04
In Roman Dutch law, which forms the basis of most South African legislation, including that which pertains to property, the principle of 'huur gaat voor koop' is honoured and accepted. The 'huur gaat voor koop' principle ensures that any contract with a tenant, whose lease has not yet expired, must be honoured if and when the property is sold.
This applies whether or not there is a bond on the home and whether or not the purchaser knew of the lease when he signed the deed of sale. Even if a lease is signed after the conclusion of the sale, this still has to be honoured.

It often happens that when a home is sold in execution, it will still have significant outstanding payments owing. It is accepted in these situations that the bank has first claim on the sale money but, again, the lease has to remain in place, says Wayne Albutt, national manager for Rawson Rentals. If, however, the sum raised by the sale or by an auction in execution is too small to cover the amount owing to the bank, the lease can then become invalid and the home can be resold or re-auctioned. Without the lease, it will probably achieve a higher price.

Evicting the tenant

Albutt says that it does frequently happen that homes, on which the sum owing to the bond issuer is not realised, are sold and in these situations the tenant has to be 'sacrificed' to ensure that the bank is better compensated. The new owner of the property may well then be faced with the challenge of evicting the tenant, who, if he has had his lease cancelled against his will, may dig in and resist this for some time. Alternatively, the new owner can draw up a new lease with the tenant.

"There are always many detailed factors which can dictate the ongoing validity of a lease if a property is sold in execution. The most important point to note is that there are exceptions of the kind I have described and the phrase 'huur gaat voor koop' should therefore not always be relied upon," says Albutt.
    
 
LEGAL DISCLAIMER: This Message Board accepts no liability of legal consequences that arise from the Message Boards (e.g. defamation, slander, or other such crimes). All posted messages are the sole property of their respective authors. The maintainer does retain the right to remove any message posts for whatever reasons. People that post messages to this forum are not to libel/slander nor in any other way depict a company, entity, individual(s), or service in a false light; should they do so, the legal consequences are theirs alone. Bizcommunity.com will disclose authors' IP addresses to authorities if compelled to do so by a court of law.

News