"My landlord sold his property and my lease has not expired yet. What are the consequences for me?"

The general principle applicable under such circumstances is the huur gaat voor koop rule. Directly translated this means, “lease goes before sale”.

In Roman law the right of the lessor’s successor in title was always stronger than the right of the lessee, whereas under Roman-Dutch law certain categories of tenants received limited protection by virtue of the huur gaat voor koop rule.

In order to understand the application of the rule in South African law, one has to distinguish between short-term and long-term leases. A short term lease is a lease agreement which is concluded for a period of less than 10 years. Where the lessee is in occupation of the property when the third party (in other words, the purchaser of the immovable property) acquires his right, the lessee will be entitled to occupy the property for the full lease period. However, where the lessee is not occupying the property he will not have a real right unless the doctrine of notice is applicable or the new owner of the immovable property is a gratuitous successor.

The doctrine of notice determines that where the third party knew of the lease contract when he concluded the contract of sale, the lessee has a real right and will be entitled to occupy the premises for the full lease period. It will be sufficient if the third party knew or found out of the lease contract anywhere between the times of conclusion of the agreement of sale up until ownership of the property has passed. In the case of a gratuitous successor (such as someone who has inherited as a legatee or heir in terms of the provisions of a will), the new owner will be bound by the lease contract even if the lessee was not occupying the property and even if the successor had no knowledge of the lease contract.

A long-term lease has a lease period of 10 years or longer. This also covers instances where the initial lease period is shorter than 10 years but together with an option to renew, the period would be 10 years or longer. Whether the lessee has a real right is dealt with in terms of legislation, specifically in the Formalities in respect of Leases of Land Act 18 of 1969.  In terms of the Act, a lessee will acquire a real right in the following situations:

1. Where the lease has been registered against the title deed of the property; and
2. Where the successor in title knew of the long-term lease at the time of the conclusion of the sale agreement.

If neither of these situations are applicable, the Act will not offer the lessee any protection and he or she will have to rely on the common-law principle of huur gaat voor koop for legal protection.