Government measures in key jurisdictions 3rd edition final - Flipbook - Page 113
SouthAfrica
Property
Have any changes
been made to
the laws around
property, rent and
enforcement?
•
The impact of Covid-19 is severe and there will undoubtedly be parties who seek to avoid their
contractual obligations. Whether or not they can be saved by a MAC clause will ultimately
depend on the precise wording of the MAC clause and the allocation of risks. It will also depend
on the facts and the effect of the pandemic on the business in question.
•
When circumstances occur which renders performance under a contract impossible, the principle of
supervening impossibility of performance in terms of the common law may also excuse parties from
performance. Supervening impossibility of performance occurs when performance was possible on
conclusion of the contract, but subsequently has become impossible through no fault of the parties.
This could be the result of a vis major or casus fortuitous.
•
The test for performance is that it must be objectively impossible. Where a party can perform,
albeit at a higher cost or with economic hardship, the RSA courts are unlikely to consider this
supervening impossibility. On the other hand, the courts have also been clear that it is not
complete factual impossibility that is required but rather that performance has become so
difficult and onerous that it can, under no circumstances, be reasonably expected that a party
must comply.
•
If supervening impossibility can be proven, the obligations of the parties under the contract will
be discharged and the contract will be terminated. This differs from force majeure, which often
allows for a suspension of performance and only provides for termination in the event that the
force majeure is not resolved within a stated period of time.
•
Under the lockdown legislation promulgated by the Government of the RSA, many businesses are
prohibited from opening and are forced to remain closed during the lockdown period.
Notwithstanding this, obligations in respect of commercial leases continue. Landlords have
however been encouraged to negotiate with tenants in respect of rental and other obligations,
and in practice certain retail tenants have, in terms of the common law, refused to pay rental and
have been granted discounts or rental free months by landlords.
•
This however does not absolve landlords from attending to their monthly instalments in respect of
their bonds if a bond was registered against the property as security.
•
The banks and financial institutions have provided relief to certain individuals and entities. This
is however not a blanket exclusion in respect of payment holidays to every person and entity.
Banks and financial institutions may, for example, either grant a one month or three month
payment holiday, depending on the financial position of the individual or entity and provided
the individual or entity was not in default with payments when the lockdown started. Other
banks have indicated that customers in selected industries who can indicate their income has
been affected by Covid-19 may be offered a 6 month payment break.
The most significant impact of the lockdown was the closure of the Deeds Offices during
lockdown level 5. The Deeds Office processes the registrations of transfer of properties and
bonds in terms of the Deeds Registries Act and no transfer of properties or registration of
bonds could transpire, which had a detrimental effect on the cash flow of individuals and
entities, causing hardship.
•
•
The Deeds Office opened under level 4 with reduced staff. The Deeds Office is currently operating
under lockdown level 3 but, as a result of its closure under previous levels of the lockdown, a backlog
exists which has resulted in delays in the finalisation and registration of matters (with the subsequent
knock-on effect on pay away under transactions, etc.).
Government measures in key jurisdictions
113