A lease agreement is a reciprocal agreement between a landlord and a tenant. The landlord agrees to make the leased property available to the tenant by giving the tenant temporary use and enjoyment thereof. In return, the tenant agrees to pay lease to the landlord. We have three types of leases namely; the lease of a thing, either movable or immovable e.g. lease of a flat or vehicle (locatio conductio rei). The hiring of a service e.g. employment contract (locatio conductio operarum) and the hiring to complete a project e.g. for an office to be built (locatio conductio operis).
A rent amount can either be agreed upon expressly or tacitly. In the case of land that is being rent, the tenant can agree to pay in the form of harvest. Rent can also be determined by way of a method or formula. It is not clear from case law whether it is acceptable to contract on a “reasonable rent”. In the case of Genac Properties Jhb (Pty) Ltd v NBC Administrators CC, a 1992 case from the old appellant division, the court said that it will probably be permissible, but this is not legally binding, seeing that it was an obiter statement made by the court.
Provision for escalation can be made in a lease agreement, it must however be objectively applicable. It may be made with reference to inflation or another formula. If one of the parties are given the discretion to determine rent, it must be objectively reasonable, as seen in the supreme court of appeal case of 1999, NBS Boland Bank v One Berg River Drive CC. Courts will tend to allow this in a lease agreement, but not with a contract of sale.
The landlord must give the tenant “undisturbed use and enjoyment” or commodus usus. If not, the tenant may be entitled to claim reduction in rent equal to the reduction in use and enjoyment that the tenant suffered. The landlord has a continuous maintenance obligation. This however, excludes, reasonable wear and tear – but can be contracted out of.
Courts are very reluctant to order specific performance where the landlord fails to maintain. Lately, the courts are more inclined to allow the tenant to self-maintain and then recover costs, if the landlord is able to repay. In such an instance, it will be required that the tenant give the landlord reasonable notice of the defect. If the landlord then not perform, the costs can be deducted from the rent, or, if it is more than the rent amount, the tenant may approach a court to recover the costs.
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