What should I look out for in a residential lease agreement

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Leasing a property can be a very exciting, but also intimidating experience for a prospective tenant. Bearing that in mind, it is very important to be aware of your rights and obligations as a tenant when signing a lease agreement. In this article, we discuss residential lease agreements and what a tenant should look out for when signing a lease for a residential property.

So, what should I look out for?

When signing a lease, it is important for both parties to understand the terms of the agreement. It is also important for the tenant (also known as “the Lessee”) to know their rights and obligations with regard to the agreement, and likewise for the landlord (also known as “the Lessor”) to know their rights and obligations.

The best point of departure is to get everything in writing first. In terms of the Rental Housing Act, the landlord must provide the tenant with a written lease on request of the tenant. This is designed to avoid any surprises or disputes down the line. All the relevant information regarding the terms of the lease must be reduced to writing, which would allow for both the landlord and tenant to be on the same page, so to speak, and will further ensure that both parties are clear as the nature and terms of the agreement.

Establishing a good relationship with the landlord is important. It allows for a relationship of trust to be established, as the landlord by is entrusting their property to the tenant. The lease will specify what part of the property is in your care for the duration of the agreement. For example, as the tenant in a sectional title scheme (like an apartment), you will likely be required to take care of the interior of the property, which would mean that any damage caused to the interior will be on you to repair. If you’re renting a freestanding house, the lease could specify that you’re required to take care of the entire property. Take note of the rules of care. A landlord might, for example, in some cases require the tenant to seek their permission before making any permanent changes, such as: drilling in order to hang up picture frames. Where the landlord would allow these changes, upon termination the tenant may be required to remove and paint the walls and return them to their original state,  at the cost of the tenant. Also take note of who your landlord is, by checking who is the rightful owner of the property, and whether they have the right or the title to lease the property in question. This will give you a better understanding of who they are, should anything go wrong, you will be able to approach them with any of your concerns. It is important to note that more often than not, as a tenant you will not be dealing directly with the owner of the property, it would most likely be the managing agents or the leasing agent for that particular property. That being said, it is still imperative to take note of who you will be communicating with for the duration of your lease.

It is also important to jointly inspect the property first before moving in. Go through the property in its entirety with the landlord, before signing the lease, this will allow you to ask the necessary questions relating to the condition of the property. Once you have been given a date to move, you may once again inquire about an inspection of the property. Should there be any repairs that need to be made, you can query them with the landlord and you will be able to gauge whether they will make the necessary repairs to the property. Check all the fixtures of the property and the appliances to see if they are in working condition. Check the taps, check if the toilet flushes properly. Do the light switches work properly? Take note of everything, so you can query this later. It is very advisable to take photos of every item of damage in the property before moving in, and email them to your landlord to create a record of what the property looked like when you moved in.

It is imperative to familiarize yourself with the important clauses in the lease agreement. For the purposes of brevity, it is impossible to go through every clause that might be in a lease agreement, but it will certainly assist you to be aware of the following clauses 1) payment of the security deposit 2) termination of the lease 3) escalation of rental.

These are very important, as most of the time tenants do not take care to concern themselves with every clause in the lease agreement.

Payment of the Security deposit

More often than not, the tenant is required to pay the security deposit first, before they can occupy the property. The amount is usually a month’s rent (sometimes two), payable to the landlord. This a deposit that is kept by the landlord for the duration of the lease, and returned upon termination of the lease to the tenant. In terms of the Rental Housing Act, the landlord is required to hold the deposit in an interest-bearing account with a financial institution and you’re entitled to that interest at the point of termination, unless you lose the right to claim it back.

The circumstances where the tenant will lose the right to claim the security deposit (or a portion thereof) back at the termination of the lease would be where there has been damage caused to the property, or where there is unpaid rental. Upon an outgoing inspection of the property (this is where those photos will come in handy!) the security deposit will be used to repair any damage caused by the tenant, and the tenant will be paid out anything left over. If there isn’t anything left over, the tenant might have to pay in any discrepancy.

Termination of the lease: this is another important clause that the tenant should look out for. Make sure you check how many months’ notice is required from you or the landlord should they wish to terminate the lease. Familiarize yourself with any clauses that will allow you to terminate your lease early and what is required in such circumstances. You should also note that if the Consumer Protection Act applies to your contract, you’re entitled to cancel the lease agreement by giving 20 business days’ notice to the landlord. Note, however, that you are still required to satisfy your rental for the period that you occupy the property, and the Landlord is entitled to charge a “reasonable cancellation penalty”.

Escalation of rental: this clause allows the landlord to escalate the rental price payable by the tenant in certain circumstances. This is usually done at the end of the lease, where the landlord has opted to renew the lease, or where the lease is for multiple years. The tenant may wish to negotiate a suitable rental increase with the landlord. However, at the end of the day this is up to the landlord’s discretion, they are under no obligation to give you a favourable rental increase. Some determining factors that may or may not sway the exercise of the Landlord’s discretion in your favour is if there is a good relationship between yourself and the landlord, if you have paid your rent on time every month, and you have taken good care of the property for the duration of the lease. Both the tenant and the landlord need to agree on an increase that is both fair and reasonable to both parties, although failure to reach an agreement may result in the landlord deciding not to renew the lease, or insisting that their rental increase percentage be accepted.

In conclusion, a prospective tenant should take care when signing a lease for a property. One should consider the nature of the agreement in its entirety and take note of their rights and obligations in terms of the agreement. Where there arises a dispute between the landlord and the tenant, the Rental Housing Tribunal is there to assist the parties and to mediate between both parties.

Tyra Kleinbooi

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