Simply put, the maxim known as ”Huur Gaat Voor Koop” has the effect that an existing lease agreement that is in force is given preference to any subsequent sales of the property – if you are a lessee and the landlord wants to sell the premises to a buyer, that buyer cannot move into the premises and/or evict you. The maxim is applicable in South Africa and is a common one that deals with immovable property. While it is a common and useful term, it is possible to contract out of it. Say for instance there is a lease for a fifteen-year period and in the eleventh year, the lessor sells the property or exchanges it. The question is: when does the lessee have a stronger real right than the lessor’s successor? Note that this is not specific to sales – it is any kind of alienation of the property. Historically, the Romans did not care for the lessee’s rights as much, which meant that the successors in the title always had a stronger right than the lessee meaning the lessee could be evicted and would have to be satisfied with breach of contract remedies against his lessor. This would be an impractical solution, especially in South Africa, a country already plagued by backlogged courts, a struggling economy, and a legal system that favours individuals with means. Thankfully, Roman-Dutch law afforded some more protection by the Huur Gaat Voor Koop maxim.
There is a distinction between short-term leases and long-term leases. Short-term leases are those which exist for less than ten years. The lessee will have a real right that is stronger than the successor in title in certain cases. This includes cases where the lessee is in occupation of the property. In other words, if the lessee does not occupy the premises, then he or she does not have the real right unless certain instances apply. Such instances may involve the doctrine of knowledge principle which asks whether the successor in title knows about the lease with the lessee. Also, if the successor in title is a gratuitous successor meaning you as a lessor are bound in terms of the maxim of Huur Gaat Voor Koop even if the lessee did not occupy the property and even if you, as the successor, were unaware of the lease. A gratuitous successor is someone who succeeds the lessor without having to give anything in return (for example an heir, i.e., you get it for free).
Long-term leases are leases that are longer than ten years but include cases where the initial period is less than ten years with the option to renew for a certain period where, in total, the period amounts to one which is more than ten years. For example, a lease period which is for seven years with the option of renewal for another seven years – the total exceeds ten years.
The lessee’s real right is not dealt with in the common law, it is dealt with in legislation, specifically the Formalities in Respect of Leases of Land Act 18 of 1969 which says that a lessee obtains a real right in certain situations. If the lease has been registered against the title deeds, then you as a lessee have a real right for the full term of that lease. Be careful, this process is handled by attorneys. Reducing a lease to writing and having it recognized against title deeds are not validity requirements for the actual contract between a lessee and lessor. Registration is needed only if you as a lessee want a stronger right than successors. Another situation is where the successor knew of the long-term lease at the time that he or she entered into the transaction with the lessor. In such cases, the lessee is also protected for the full term of the lease. If neither of these scenarios applies, you cannot rely on the Act and must use the common law, which states that the lessee will have a real right if they occupy the property though this is limited to a maximum of ten years.
If you need assistance in any lease disputes or wish to structure your agreements, do not hesitate to contact us to assist you.