Commercial rental success: Protect your rights and your deposit

One of the most important aspects of a successful property transaction, specifically a commercial transaction, is having a fully signed and initialled lease agreement in place.

Although this may seem like a given, many lease agreements are in fact left blank where one or both parties are required to sign and initial for a valid, binding written contract to exist. TPN has released a Commercial Offer to Lease to the industry to provide better protection for landlords in this instance.

No legislation regulates commercial rentals

Why is this so vital? Unlike the Rental Housing Act, which governs and regulates all residential rentals, there is no specific legislation that regulates a commercial rental. For this reason, your commercial property transaction will be governed by the terms and conditions set out in your lease agreement. It is critical to ensure that your commercial lease agreement is legally compliant and comprehensive enough to protect your risk and liability as a landlord.

A commercial lease agreement must be signed in full to hold either party liable in terms of such an agreement. Normally unsigned lease agreements can be proven to be binding on both parties due to their tacit intentions and conduct, however a tacit lease agreement is difficult and a lengthy process to prove.

Protect your rights with an Offer to Lease

However, with the new TPN Commercial Offer to Lease, your scenario may play out quite differently. The Offer to Lease must be signed and initialled by a tenant before the landlord can consider their offer to lease the property. Once approved and countersigned by the landlord, the next step is to conclude the formal lease agreement between the parties.

Problems often arise during the signature procedure and a landlord may encounter a situation with a tenant occupying the property without a proper signed lease agreement in place. In the event of legal action, to rely on the unsigned lease agreement, the landlord will need to prove that a tacit or implied lease agreement exists to hold the tenant liable for any breach of the terms and conditions of the agreement. This process can be lengthy and costly!

With a fully signed and initialled Offer to Lease, there is no need to prove a tacit or implied agreement as the signed Offer to Lease will be the agreement to hold the defaulting party liable. The Offer covers the payment of any cost in terms of the lease agreement, i.e. rental, rates and taxes, utilities etc., and it clearly defines the parties to the agreement and their obligations in terms thereof.

Secure your deposit and the right to cancel the lease

Further to this, the Offer includes a clause that should the tenant not provide a counter-signed lease agreement within 7 days of notice to do so, then in such a case, the landlord has 30 days to decide to continue with the transaction or cancel the agreement immediately and request that the tenant vacates the building. In terms of the Offer, the deposit must be paid on signature thereof further providing protection to the landlord to have the monetary security related to the property in their bank from the outset of the application.

Get better protection against delinquent tenants

The TPN Commercial Offer to Lease protects the landlord in any event where tenants are failing to sign lease agreements or pay deposits in terms of the agreement. With a signed Offer, the landlord has a lot more protection against delinquent tenants should the tenant fail to honour the agreement and legal action be required.

In the competitive commercial leasing environment, it is critical to have up-to-date, legally compliant documentation for a smoother and more secure leasing process. Learn more about the Commercial LeasePack here.

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TPN Vacancy Survey Report Q3 2024

National residential rental vacancies fell to 5.07% in the third quarter of 2024, the lowest since the TPN Vacancy Survey started in 2016. Limited new supply and strong demand kept vacancies low in this quarter, with properties under R12,000 a month …

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