My tenant of four years moved out a month ago. I paid him his deposit within days after he moved out. He says I short-changed him and is asking me to pay interest on the money. The deposit was a large chunk of cash, so I can understand why he’d be trying his luck. But I just want to find out whether he has any leg to stand on. I’ve never paid a tenant interest before.
During your personal and professional life you are bound to enter into numerous legal agreements. But an often-overlooked question when you enter into an agreement is: when and how can you get out of the agreement? This generally depends on what was agreed in the terms and conditions of the contract.
Fixed-term: an agreement will end when the contract says it will end. If the agreement was only intended to last for a few months and expressly states that it will end on a pre-determined date, then the agreement will end on that date. Some agreements provide for a renewal. This renewal can be automatic, in which case you would need to notify the other party if you would rather the agreement terminates (and not renew). Or the renewal can be at the option of one or the other party, in which event you would have to notify the other party if you don’t want the agreement to terminate (and do want it to renew).
How effective is a verbal agreement? Is it binding? A lot of businessmen and women enter into verbal contracts without being entirely sure whether they’re valid, or how effective the contract is.
In general, South African law recognises verbal agreements. There are some exceptions to this. For example, a sale of property needs to be in writing, as does an ante-nuptial agreement. But unless there’s a statutory provision that says otherwise, oral agreements are, in theory, just as binding as written ones. In theory. The problem is that verbal agreements come with a lot of, well, problems.
My company has been struggling to stay above water in this rough economic climate, and was eventually put into business rescue. We owe one of our main suppliers a substantial amount of money. The supplier was on the verge of starting a law suit against us when the business rescue happened. Now he is demanding that I pay the debt personally, and is threatening to sue me instead, if I don’t pay up. I signed a personal suretyship when my company applied for the credit. Is this suretyship still valid?
After endless weekends searching for that perfect property, the tenant finally heaves a sigh of relief. Found it! And it’s perfect! The forms are signed, the deposit and first month’s deposit is paid, the removal van is booked. Let the settling in begin.
But have you ever wondered what the landlord is planning on doing with that deposit? Here’s the thing: the deposit doesn’t belong to the landlord. It is held by the landlord as a form of security, in case the tenant damages the property or fails to pay their rent or electricity. But unless or until such time as the tenant steps out of line, the landlord has no right to the money. This is generally not really thought about until the lease ends. Which is when the tenant starts clamouring for their money back. And this is when the landlord often scurries to find another tenant, so that they can use the new tenant’s deposit to pay back the old tenant’s deposit. Because the old tenant’s deposit was spent within days after it was paid over.