June 14, 2018
What Happens If You Cancel Your Lease Early?
“There ain’t no such thing as a free lunch” (Wise old adage)
You sign a two year lease for a nice little apartment (or a large family house if you have a spouse, 3 kids and a dog) but after 6 months your employer transfers you and you have to cancel early.
“Fine” says your landlord “but you are breaching your lease and I am holding you liable for the remaining 18 months’ rental”.
What are your rights? As is often the case in life, that depends…
Check the terms of your lease
First things first, generally your most important consideration is this: “What does my lease say about termination?”
Most leases specify what happens if you don’t comply with the terms of your lease and our law will generally hold you to your agreements. So if you have agreed to be bound to a two year lease, your starting point should be that you are at risk if you cancel early.
Before you concede anything however, consider the following –
Does the CPA apply?
First step is to decide whether the Consumer Protection Act (CPA) applies to your lease.
The CPA gives its protections to “fixed-term agreement” tenants but only if your landlord is leasing to you “in the ordinary course of business” and it’s unfortunately not yet clear how our courts will interpret that definition in property leasing scenarios. For example, if your landlord is a property investor running a full-on letting business with a whole selection of apartments or houses, you will definitely fall under the CPA. But what about a private home owner who is overseas for a year and rents to you on a temporary basis? Or a pensioner letting out a “granny flat” to boost their retirement income? You can certainly argue that in both cases the landlord is making “a business” of the letting out, but expect your landlord to disagree.
The 20 day notice provision in the CPA
If the CPA does indeed apply, this is the crux: The CPA allows you to give your landlord 20 business days’ notice, at any time, and for any reason.
“Hooray” I hear you shout, “I get off scot free”. But not so fast!
The CPA also allows your landlord –
- To recover any amounts still owed by you in terms of the lease up to the date of cancellation, and
- To impose a “reasonable cancellation penalty”. The principle here isn’t to punish you by allowing your landlord to, for example, automatically hold you liable for the full remaining period of your lease. The idea rather is to let the landlord recover all actual losses resulting from your early cancellation – rental lost until a new tenant is in place, re-advertising costs, new agent’s fees, new lease preparation costs and so on. Particularly if you are cancelling a fixed-term lease early on, expect to pay for the privilege.
Note that this all applies regardless of what your lease says – you can’t be contracted out of these protections. In other words if your lease imposes a set “early cancellation fee” or the like, it must still be a reasonable one. Note also that you must give the required notice “in writing or other recorded manner and form” (keep proof).
What if the CPA doesn’t apply?
In this case, you have no specific right of early cancellation and will be bound by the terms of your lease.
But you still aren’t entirely at your landlord’s mercy. Any penalty imposed on you must still be reasonable. Per the Conventional Penalties Act, a court can reduce a penalty if it is “out of proportion to the prejudice suffered” by the landlord.
© LawDotNews
June 14, 2018
Life Partners: Beware the “Common Law Marriage” Myth!
“The general rule of our law is that cohabitation does not give rise to special legal consequences, no matter how long the relationship has endured” (From a 2010 High Court judgment and still applicable)
One of the more pervasive myths in South Africa is that, if you live together for long enough as “life partners”, you have some form of legal protection because you are in a “common law marriage”.
Not so! Our law has never recognised any such concept, and you could well be left high and dry when your partner dies or leaves you. The problem is that cohabitants have none of the general legal rights and duties to each other that apply to formal marriages and civil unions. The draft Domestic Partnerships Bill, which was published in 2008 and was supposed to remedy this situation, appears to have fallen off our lawmakers’ radar.
So what should you do?
If you don’t want to get formally married or register a civil union (some customary marriages are also recognised), ask your lawyer as soon as you can for advice on –
- Drawing up a full “domestic partnership agreement” (often called a “cohabitation agreement”). Make sure that at the very least it regulates your legal rights and financial arrangements both –
- During your relationship, and
- In the event of separation or death. Under this heading, address questions such as –
- How will your various assets be divided?
- Will you be liable/eligible for maintenance and other financial support?
- Whether there will be any financial adjustment between you. What happens for example if only one of you works? Or if you paid for an extension to your life partner’s house or have been paying the bond?
- Who will take over ongoing liabilities and contracts such as leases, bonds, medical and life policies, monthly accounts and so on?
- Anything else that will need to be regulated in your particular circumstances. This item is of course particularly important if there are children involved.
- Drawing up wills to provide for the survivor on death. Without a will, our laws of “intestacy” apply and the surviving partner has no right to inherit nor to claim maintenance from the deceased estate. Have your will professionally drafted; amateur drafting has caused many bitter disputes and litigation between potential heirs.
The risk of doing nothing
If you don’t have such an agreement and wills in place, you will have no rights of inheritance on death, and will walk away from a broken relationship with nothing but whatever you can prove to be your own separate assets. Our law reports are full of tragic cases of long-term life partners left destitute and homeless after decades of cohabitation.
If you are faced with that bleak prospect, ask your lawyer for advice on whether –
- There are any specific rights applicable to you. In a few limited cases our laws have already addressed this issue – such as in regard to child maintenance, medical aid, income tax, estate duty, pension funds, protection from domestic violence and the like.
- Where our laws have not yet addressed the issue of equal rights for cohabitants you may be able to convince a court to declare them unconstitutional, but that’s a long and expensive road.
- You may also be able to prove the existence of a “universal partnership”. That can be difficult to achieve in practice, and even if you succeed there is no guarantee of anything like a 50/50 split.
Avoid all that risk, cost, delay and dispute with a comprehensive life partnership/cohabitation agreement!
© LawDotNews
June 14, 2018
Landlord v Tenant: Consider the Tribunal Dispute Resolution Option
“Agree, for the law is costly” (Marcus Tullius Cicero, Roman lawyer and statesman)
We all know how easy it is for misunderstandings and disputes to arise between landlords and tenants, and whilst most can be resolved with a bit of open communication and negotiation, sometimes independent intervention is needed.
Enter the Rental Housing Tribunal, which uses the Rental Housing Act to “speedily resolve” landlord/tenant disputes, to balance the rights of both sides and to protect them both from “unfair practices and exploitation”.
Note that this applies only to residential housing, not to commercial or industrial leases.
What’s the cost and how does it work?
It’s free, and to get going you lodge a complaint with your local Tribunal. An impartial mediator is then appointed to help you settle the dispute and reach an agreement. If that fails a formal hearing is held and a ruling issued. Either side can take the ruling (which is binding and must be complied with on pain of criminal prosecution) on review to the High Court.
You can if you like draw up your own complaint and represent yourself in the hearings, but – particularly if there’s a lot at stake – taking legal advice upfront is far safer.
Because the Tribunal cannot order eviction (only a court can do so) and needs time to resolve complaints, landlords faced with a non-paying tenant will usually go straight to court.
For most disputes however, both landlords and tenants should seriously consider following the quick, cheap and easy Tribunal route.
Prevention being better than cure…
Of course first prize is as always to avoid disputes altogether. Start off with a properly-worded, clear and comprehensive lease. Make sure you comply with Rental Housing Act basics like joint inspections for damage, investment and refund of deposits, avoiding unfair practices and so on.
Ask your lawyer for assistance here – blindly using a generic lease without taking advice is a recipe for disaster.
© LawDotNews
June 14, 2018
Bitcoin and the Law – Is It Legal, What About Tax, and Can You Leave it to Your Heirs?
Have you joined, or been tempted to join in, the “Bitcoin frenzy”? If so, read on.
Bitcoin and Ethereum are probably the best known of the cryptocurrencies, but (as at 10 April 2018) there were over 1,565 of them, and that number is growing.
Whether Bitcoin and its cousins are good investments is a matter for you and your financial advisers to puzzle over but let’s have a look at a few legal aspects –
Expect grey areas and big changes
Governments, Tax Authorities, and Central Banks around the world are struggling to get to grips with cryptocurrencies and how to treat them. Some countries allow them; some have banned or restricted them. Expect ongoing uncertainty and a lot of future change in these official positions, including attempts to regulate alternative currencies in general.
Are cryptocurrencies legal?
The short answer seems to be yes, there’s nothing to stop you buying, holding, using or selling them. The Reserve Bank’s official position is that they can be traded and used as “a medium of exchange, a unit of account and/or a store of value”, but they aren’t “legal tender” (“bank notes and coins in RSA which can be legally offered in payment of an obligation and that a creditor is obliged to accept”). What that means is that Joe Plumber is free to accept payment from you in Bitcoin if he wants to. He just can’t insist on it, nor can you.
SARS’ view (see “Income Tax and VAT” below) is probably going to be your greater area of concern for the moment.
What if you need help from a court?
The Reserve Bank warns that you acquire cryptocurrencies at your own risk and that you “have no recourse to South African authorities”.
What that means in practice remains to be seen (would SAPS really refuse to investigate a theft of Bitcoin?), and whilst there is no precedent to confirm that our courts will indeed help you if you have to sue over, for example, a Bitcoin transaction gone wrong, the majority view seems to be that they will.
Must you pay Income Tax and register for VAT?
From the horse’s mouth so to speak, this is some of what SARS says (all highlighting is ours) –
- It will “continue to apply normal income tax rules to cryptocurrencies and will expect affected taxpayers to declare cryptocurrency gains or losses as part of their taxable income.”
- “The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties.”
- “…cryptocurrencies are not regarded by SARS as a currency for income tax purposes or Capital Gains Tax (CGT). Instead, cryptocurrencies are regarded by SARS as assets of an intangible nature.”
- “Determination of whether an accrual or receipt is revenue or capital in nature is tested under existing jurisprudence (of which there is no shortage).”
- “Taxpayers are also entitled to claim expenses associated with cryptocurrency accruals or receipts, provided such expenditure is incurred in the production of the taxpayer’s income and for purposes of trade. Base cost adjustments can also be made if falling within the CGT paradigm.”
- “…VAT treatment of cryptocurrencies will be reviewed. Pending policy clarity in this regard, SARS will not require VAT registration as a vendor for purposes of the supply of cryptocurrencies.”
There’s more, and you don’t want to take any chances here, so consult an expert in need.
The Endgame: Leaving Bitcoin in your Will
Your cryptocurrency holdings are assets in your estate and you will want your heirs to get them. Your executor must deal with them together with all your other assets (both physical and digital).
Remember however that your holdings will be lost forever if your heirs/executors don’t know about them or can’t access your digital cryptocurrency wallet. They will need all your digital keys – both “public” (wallet address) and “private”.
In whatever manner you plan to leave your heirs/executor a record of these keys on your death, avoid disaster with these tips –
- Do it now – no one knows when they’ll die.
- Do it securely – anyone with your private key can clear your wallet out, and criminals know that.
© LawDotNews