Renting Pitfalls for Sellers
If you're a seller renting out a property and you're aiming to sell it, you're entering a tricky zone, especially under South African law!
Selling a rented apartment in South Africa isn’t as simple as “putting it on the market.” The tenant’s lease carries legal weight that can overshadow your sale plan. The smartest approach combines legal knowledge, clear communication, strategic marketing.
Summary of Pitfalls
- Lease overrides sale – tenants stay until the lease ends.
- Lease specifics matter – check for sales or termination clauses.
- Disclosure is mandatory – failure can derail the sale, and even expose you to legal liability.
- Marketing limitations – harder to show when there are occupiers.
- Viewings limited by tenant schedules – complicates sales process.
- Deposit transfer risk – mishandling can cause disputes.
- Ignoring tenant communication – hurts goodwill and sale pace.
- Forfeited negotiation leverage – missed collaborative opportunities.
Best Practices to Avoid Pitfalls
· If possible, include a clause in your lease agreement that states the property may be put onto the market at a future date. Should this be the case, and a Sales Agreement be signed, a three month notice period would apply.
- Review the lease thoroughly before listing.
- Communicate early and honestly with tenants.
- Strategize marketing based on tenant status and target buyer.
- Transfer deposits properly and document the handover.
- Use tenant cooperation incentives if you're aiming for vacant possession.
- Ensure agent compliance with disclosure duties.
And in more detail:
1. Tenant Rights supersedes the sale: “Huur gaat voor koop”
In South Africa, the age-old legal principle “huur gaat voor koop” (lease comes before sale) ensures that a valid lease remains enforceable even when the property is sold. The tenant retains their rights, and the lease—including all its terms—automatically transfers to the new owner. The new owner steps into the shoes of the existing landlord.
2. The Lease Holds Power—Even Against Your Plans
- Fixed-term vs. Month-to-month leases: With fixed terms, tenants stay till the lease ends. Month-to-month agreements still require proper notice to terminate.
- Lease clauses: Watch for embedded clauses that either give tenants rights like “first refusal” upon sale or allow early termination if the property is sold. These can dramatically change your options.
3. Legal Risks from Mismanaging Tenant Transitions
If a buyer discovers a tenant with a binding lease that wasn’t disclosed, they may face legal complications or unintended squatter rights. Agents must legally disclose tenant status and lease details to prospective buyers.
4. Viewings, Marketing & Tenant Cooperation
You must respect tenants' rights to quiet enjoyment, providing reasonable notice—typically 24 to 48 hours—for viewings. Disrupting their daily life without this can cause friction. Selling while tenants occupy the place often limits your buyer pool.
5. Losing Strategic Sales Flexibility
Selling with tenants in place restricts your ability to market the property as a move-in ready home—especially to owner-occupiers. Some buyers may be deterred by the inconvenience of coordinating around tenancy.
6. Overlooking Deposit Transfer Obligations
When the property changes hands, the tenant’s security deposit—and any interest—must be properly transferred to the new owner, with documentation. Failing to do so can cause disputes and liability.
7. Communication Breakdown with Tenants
Failing to communicate with tenants from the outset can lead to resistance around viewings and negotiations—or even legal pushback.
8. Missed Opportunities for Collaboration
Proactive communication pays off. Offering incentives—like short-term rent reductions, flexible schedules, or relocation help—can encourage tenants to cooperate and vacate amicably.
Conversely, withholding communication can prolong the sale and hurt your negotiations with buyers.
