Written for Property Poser
This week’s Property Poser question comes from a tenant who has made various improvements to a property since moving in three months earlier.
Shortly after taking occupancy, he laid a concrete slab beneath the carport where there was only bare soil before.
He then moved a sliding door, installed kitchen cupboards, a shower and wash basin, carpeted the bedrooms and painted the inside of the dwelling at a total cost of about R20 000.
The property is now on the market and his concern is how he will get his money back from the current owner. He has an option to buy the property in terms of the lease agreement, but has elected not to exercise it.
Charlotte Vermaak from Chas Everitt in Port Elizabeth says it is not clear from the reader’s correspondence whether he obtained the landlord’s consent to effect the improvements. “Without a copy of the lease agreement, we have to consider the common law relating to the situation.”
Vermaak says a distinction is drawn between “useful and luxurious” improvements on the one hand and “necessary” ones on the other.
The tenant may remove the former (without damaging the property) when vacating the house, but not the latter, according to Vermaak. “In terms of the Rental Housing Act the landlord is entitled to receive the property back in a good state after expiration of the lease, save for fair wear and tear.”
The tenant could claim compensation calculated on the enhancement to the property value or the actual expenditure, whichever is the lesser, says Vermaak.
“This situation is however most often dealt with in the lease agreement. The most typical provision would require that the landlord has to consent to any improvements the tenant wishes to make.”
Jacques Ehlers from Du Toit Strömbeck Attorneys in PE says further provisions would typically provide that any improvements become the property of the landlord.
“These may even exclude compensation due to the tenant for improvements if done without permission. Not to complicate the issue, but should compensation not be excluded in the contract, the tenant may have a claim against the landlord based on the landlord being unduly enriched.”
According to Ehlers, the contract could also stipulate that compensation for improvements made with the consent of the landlord may be limited to the actual cost regardless of the increase in value of the property. “This would be particularly relevant where the property is sold as in the reader’s case.”
Ehlers says the landlord is obliged to keep and maintain the dwelling in compliance with all ordinances, health or safety regulations or any other law. “Therefore, if the tenant did repairs that qualify as necessary maintenance and for which the landlord is responsible, the tenant shall be entitled to a reimbursement.”
It is clear that a tenant should carefully consider spending money on improvements to a leased property, since there may be a real risk of him or her not being reimbursed, warns Ehlers.
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