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I HAVE A TENANT IN MY PROPERTY… CAN I SELL?

Oct 26, 2022

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You have just renewed your lease with your tenant and suddenly you find a beautiful home you love and you need to release some capital to purchase your dream house. Can you put your property on the market? What happens to the tenant? Whose rights are protected in this situation?

YES, you can put your property on the market and yes, you can sell it. HOWEVER the tenants lease will remain fully binding on the new owner. The maxim “huur gaat voor koop” applies in South African Law: loosely translated this means a lease outweighs a sale. 

In practice it means that any prospective purchaser will be made aware that there is an existing tenant. The result is that on registration of transfer the purchaser will step into the sellers shoes as landlord and take over the lease agreement. The landlord and tenant will both have the same rights and obligations as before the sale took place. No transfer of the lease agreement needs to take place as it is ceded from seller to purchaser by operation of law, meaning it automatically happens and no amendments/new lease agreement are required.

It is advisable that a copy of the lease agreement is provided to the purchaser before the Sale Agreement is concluded in order for the purchaser to be aware of the contract they are entering into. 

The Purchaser will be liable at the end of the lease for the return of any deposit paid by the tenant and therefore it must be noted that the deposit should be transferred to the purchaser on registration of transfer of the property, to be held until the lease agreement terminates.

In conclusion you can sell your property with a tenant in place and it could even be an asset to the right buyer. Should you have any questions arising from this article please don’t hesitate to contact us.