The Consumer Protection Act… Assume it could be anywhere

The Consumer Protection Act… Assume it could be anywhere

A large majority of people in South Africa are not home owners and rent property.  Some lessees choose to rent and others are forced to rent.  No matter for what reason you find yourself to be a tenant, it is important to read and understand your lease agreement. Most tenants are so excited to be able to rent their dream home, that they merely sign on the bottom line.

Even though the Consumer Protection Act 68 of 2008 (hereinafter referred to as the CPA) has been with us for some time, many individuals are oblivious to the fact that the CPA is applicable to lease agreements.  One would furthermore struggle to convince a court that it would be justifiable to try and contract out of the CPA in an attempt to circumvent it completely. The basis of the argument would be that a consumer cannot proceed to contract out of certain sections of legislation that was implemented to protect him or her in the first place. There is however an argument to made that the lessor in some cases may not lease property in the course and scope of his business and therefore the agreement falls outside the act.

One of the most important aspects in a lease agreement where the CPA is applicable would be the aspect surrounding early termination of a fixed term lease agreement.  Prior to the implementation of the CPA one would look towards the Conventional Penalties Act 15 of 1962 for relief in the event of early termination of an agreement.  The question would then be what is considered to be a “reasonable penalty” for damages summered. This entailed having to quantify damages before proceeding to claim for these damages.

The CPA is not very clear on the aspect of quantification.  The act does not expressly indicate that the damages need to be quantified but allows for parties to agree to a penalty in the event that the agreement is terminated before the agreed time frame.  This may lead to a situation where one party may receive an amount that is not reasonable.

Section 14(2)(a)  of the CPA read together with Regulation 5(1) indicates that a maximum period of a fixed term agreement would be 24 months unless expressly contracting to the contrary.  Section 14(2)(b) of the CPA provides the consumer with the opportunity to terminate a fixed term agreement after providing 20 business day notice,  subject to the consumers right to reasonable compensation. This is where the parties may agree to an amount (for example 2 months’ worth of rent). It is also this provision that may be open for argument regarding what constitutes to be “reasonable”.

Section 14(2)(b)(ii) is applicable to the Landlord and indicates that they may terminate a lease agreement after affording the tenant 20 business days to remedy any breach of the agreement by the tenant.  In terms of Section 14(2)(c)the landlord has to also inform the tenant of the lapse of any lease agreement before it lapses (No longer than 80 business days and no shorter than 40 business days before the term ends).

It is therefore very important that tenants read their agreements very carefully in order to understand its rights. In the event that an agreement has already been concluded, it is equally important to engage with your landlord timeously should you consider cancelling any lease agreement.  Parties can then agree to alternative terms such as obtaining a new tenant or agreeing on an alternative penalty (depending on the circumstances).

At the end of the day, it is very important for any consumer to always consider that the CPA may be everywhere.