Written for Property Poser
This week’s Property Poser reader question is from a small business owner who has signed a two-year lease for premises.
The contract stated that the tenant would be responsible for the costs incurred in drawing up the agreement.
Before receiving the contract, the reader requested a draft agreement so that she could familiarise herself with the terms thereof. She was given an “old” contract.
Several weeks later she received the final contract, which she noticed was the “old” one with merely her personal details inserted.
A few months later she received an “exorbitant” account from an attorney, whom she has never met, for the drawing up of the final agreement.
She asks whether this is acceptable for merely “inserting her name”.
Charlotte Vermaak from Chas Everitt in Port Elizabeth says the provisions of the Rental Housing Act No 50 of 1999 and the Constitution will determine, to a large extent, what the contents of a lease agreement will be.
As with all types of contracts, they are also subject to the common law and, more specifically, the law of contracts, for all matters agreed upon by the parties and that which is not specifically dealt with in the above legislation, according to Vermaak.
“One such provision would be which party is responsible for the cost of preparing the lease.”
Vermaak says if the lease was prepared by an attorney on the landlord’s instructions and it is silent on the matter of costs, there is no contractual basis on which the tenant could be held liable.
“When the tenant agrees to pay the costs, it would be a good idea to specify the amount in the lease. This will ensure that there is no uncertainty or nasty surprises.”
Vermaak says if the lease does not specify costs, but merely that the tenant agrees to pay them, the clause will be enforceable. “When presented with a lease containing such a clause, the tenant will be well advised to request the landlord to advise what the costs are before signing.”
Rian du Toit from Du Toit Strömbeck Attorneys in PE says when faced with a seemingly exorbitant account by an attorney after having contractually agreed to pay an unspecified fee, as the reader has done, a tenant is not left without recourse.
“Attorneys are obliged to act ethically when preparing an account for services rendered, and to charge a reasonable fee for actual work done and disbursements incurred.”
When drafting contracts, according to Du Toit, many factors may influence what may be regarded as a reasonable fee, for example the complexity of the document, time spent thereon, urgency and so on.
“The client, or any other party liable for payment of costs, is entitled to information to know that a fee is fair and reasonable. The reader may therefore request the attorney to provide an itemised account.”
Du Toit says if the reader does not feel that the fee justifies the work done, she may request the attorney to have the fee taxed. “The various provincial law societies have taxing committees tasked with determining whether a fee charged for a specific mandate is reasonable.
“They can also be contacted for information relating to the guidelines which attorneys are advised to follow when determining their fees,” says Du Toit.
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