Termination of a rental lease agreement is allowed, but there are legal steps that should be followed, and implications that need to be understood.
Advising how a landlord or a tenant can legally terminate a rental agreement, and under what circumstances, is Khairiyah Safeda, Founding Director of legal firm Safeda & Associates.
Reasons why a lease termination may be required:
- Landlords: The property may be needed for personal reasons, such as family occupancy or major renovations. Non-payment of rent, breach of contract (such as sub-letting without permission), or property damage may also be grounds.
- Tenants: Common reasons include a work relocation, personal circumstances (e.g., care of a family member), or dissatisfaction with property conditions that make it unliveable.
Differences between a lease cancellation and an eviction
Lease cancellation: Refers to the end of a lease agreement and may involve the tenant voluntarily leaving.
Eviction: An eviction order is required if a tenant refuses to leave after lease cancellation. This must go through the courts, in terms of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act (PIE Act).
Legal framework applicable
For landlords:
Under the Rental Housing Act and the Consumer Protection Act (CPA), landlords can cancel a lease if there is a material breach (e.g., unpaid rent).
The CPA permits lease cancellation with 20 business days’ notice for breaches, giving the tenant a chance to rectify the issue.
For tenants:
Tenants can cancel a lease under the CPA with 20 business days' notice for any reason, but a “reasonable penalty” may apply, calculated based on factors like the remaining lease term and the likelihood of finding a new tenant.
Acceptable communications
The following is required by law:
- Notice in writing: The landlord must advise of cancellation in writing, and in accordance with the provisions of the lease agreement.
- Electronic notice: An electronic communication may be used if the lease agreement allows for such communication. “It’s best to confirm that the notice has been received,” says Safeda.
- Verbal notice: Legally risky as it lacks written proof. “It’s advisable to follow up any verbal notice with a written confirmation,” she says.
Handling lease cancellations legally
- Early stages: It’s advisable to handle cancellations with legal guidance, and more so if it’s a complex case or involves large financial implications.
- Formal notice: If termination is based on a breach, formal procedures should be strictly followed to ensure the grounds for termination are legally sound.
- Good notice period: Under the CPA, 20 business days is standard for breach-based cancellations.
- Fixed-term leases: Typically allow for cancellation on agreed notice terms or through mutual agreement.
- Personal reasons like family relocation or job transfer do not automatically allow lease cancellation without financial consequences. “If these circumstances arise, both parties may negotiate terms, such as finding a replacement tenant or adjusting the notice period,” confirms Safeda.
Sub-letting and finding a replacement tenant
Whilst a tenant may feel they are doing the landlord a favour by introducing a new tenant that is able to take over the lease, the lease agreement must be the guide.
Tenants generally cannot sub-let without written permission from the landlord, per the lease agreement. Read more about subletting.
If a tenant wishes to leave early, they may propose a replacement tenant, which the landlord can accept or decline based on reasonable grounds.
Deposit use for urgent vacancy
As indicated, there are often reasons beyond the tenant’s control, that require them to negotiate for the cancellation of the lease. The question is what is allowed in terms of the deposit they have given to the landlord?
The deposit can generally only be used for final expenses, like damage repairs or unpaid rent at the end of the lease.
If the tenant vacates early without fulfilling lease obligations, the landlord may withhold the deposit to cover any financial shortfall, as per lease terms.
Automatic cancellation scenario
A lease may only be terminated automatically if the property becomes uninhabitable (e.g., due to natural disaster) or through mutual agreement.
Impact on credibility
- Tenant: If early cancellation is without just cause and without agreement, it may affect the tenant’s rental history.
- Landlord: A landlord canceling without legitimate reason could face claims of unfair treatment or CPA violations.
Other considerations
“Two important factors should be in play,” says Safeda. “The first relates to a legal review, meaning that either party should ensure that lease terms are aligned with South African law and include clear cancellation terms.
“The second is the value of mediation. Disputes over lease cancellations often benefit from mediation or legal advice, as this can save both time and costs in comparison to court action.
“It's always advisable to consult a legal professional when specific disputes or complex lease terms are involved to ensure compliance and protect both landlord and tenant rights,” concludes Safeda.
