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  • Adriaan Engelbrecht

DOES THE CPA APPLY TO RESIDENTIAL LEASE AGREEMENTS?

The question whether or not the Consumer Protection Act 68 of 2008 ("the CPA") applies to residential lease agreements has divided the legal fraternity for some time now.


In the recent judgment of Transcend Residential Property Fund Limited v Mati and Others (14639/2017) [2018] ZAWCHC (20 March 2018) the Western Cape High Court had to determine this question in the context of an eviction application.


In the Transcend matter it was argued by the occupier of the residential property that he was a 'consumer' as defined in the CPA and therefore he had to be given twenty (20) business days notice of his breach of the lease agreement in terms of section 14(2)(a)(ii) of the CPA before the lease could be cancelled.


Section 14(2)(a)(ii) of the CPA holds that if a consumer agreement is for a fixed term the supplier may cancel the agreement 20 business days after giving written notice to the consumer of a material failure by the consumer to comply with the agreement, unless the consumer has rectified the failure within that time.


The court considered the definitions of 'consumer' and 'transaction' as defined in the CPA, looked at the preamble of the CPA and its purpose and ultimately held that the occupier was indeed a consumer in terms of the CPA. It was thus decided that the CPA was applicable to the residential lease and that the consumer was entitled to twenty (20) business days notice when in breach of the lease agreement, before the lease could be cancelled.


If applied across the board by our courts this judgment effectively means that landlords have to provide their tenant's with twenty (20) business days (effectively a calendar month) notice of breach before they can cancel the lease agreement.


It is however important to note that in the Transcend matter the landlord was a Real Estate Investment Trust that leased out residential properties in the ordinary course of its business.


According to the definition of 'consumer' in section 1 of the CPA a consumer is a person to whom goods or services are marketed in the ordinary course of a supplier's business, or who has entered into a transaction with a supplier in the ordinary course of a supplier's business. The definition includes a person who is a user of the goods or a recipient or beneficiary of the particular service irrespective of whether that person was a party to a transaction concerning the supply of the goods or services.


On our interpretation of the CPA and the Transcend judgment we are of the view that if a person leases out a residential property and it is not in the ordinary course of that person's business (meaning that the leasing of residential properties is not that person's business) section 14(2)(a)(ii) of the CPA is not applicable to the lease agreement.


Having said this, there will be those in the legal fraternity, who disagree with our interpretation and ultimately it might be best to give all tenant's who are in breach of the lease agreement twenty (20) business days notice before cancelling the lease agreement. By doing this the landlord can be sure that the CPA argument cannot be raised by the tenant or the court in subsequent eviction proceedings.


We will watch this space and see how our courts interpret the Transcend judgment in future matters.


We specialize in evictions and regularly assist landlord’s through this cumbersome, but necessary process.


For more information on the eviction process, how long it normally takes and the costs involved contact us on 011 794 6604 or at adriaaneng@mweb.co.za.


- Adriaan Engelbrecht


The above article should not be seen as legal advice and we recommend that you contact the writer or another legal practitioner to discuss your specific individual matter in more detail. All legal matters are different and depend on the unique facts of the matter.


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