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  • Writer's pictureThe Kaplan Team

THOUGHT OF THE WEEK Selling property subject to an existing lease agreement

Updated: Mar 31, 2020

One often deals with transactions where a property that is leased to a tenant, is sold. The question then arises as to what the rights of the tenant, seller and purchaser are. In terms of the South African common law, an existing lease agreement may not be prematurely cancelled by the landlord because of the sale of the leased property. The lease agreement endures until such time that it expires as result of the effluxion of time. This rule is embodied in the maxim “huur gaat voor koop”. Roughly translated, it means that an existing lease agreement trumps a subsequent sale. Therefore, when a property is sold in these circumstances, the purchaser will take over the lease agreement by substituting the seller. The purchaser will generally have the same rights and obligations towards the tenant as the seller had. Conveyancing attorneys often assist to formalise this arrangement by drafting a cession of the lease agreement, signed by the seller, purchaser, tenant and the managing agent (if applicable). It is important, when negotiating the sale or purchase of a property, to alert all the parties of the fact that the property is tenanted to avoid future complications between the parties involved in the transaction.

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This article is not intended to constitute legal advice and is produced for information purposes only and to provide a general understanding of the legal position relating to the topic. It is recommended that advice relating to the specific circumstances of your situation be sought from our attorneys before acting upon the content of this article. This article was written at a particular point in time and accordingly may not always reflect the most recent legal developments, if any, applicable to the relevant topic. Kaplan Blumberg and its partners and/or employees, are not responsible for any consequences which may follow upon any decision taken to act upon the information provided in this article.

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