Many people will not be able to earn an income during the lockdown. The first question is whether the Covid-19 pandemic and resulting measures qualify before the law as a force majeure or a vis major event. Vis major (an “act of God”) is a legal term referring to an uncontrollable superior power or event. A related legal term is casus fortuitus.
To qualify as either vis major or casus fortuitus, an event must be uncontrollable and unforeseen, resulting in complete or partial release from obligations. Covid-19 and the lockdown do indeed qualify as vis major events.
1. A landlord will likely not be entitled to compel tenants to pay full rental if the lockdown has forced those tenants to close shop.
2. A landlord cannot refuse to pay levies – there is no way Covid-19 impacts on ownership that will release landlords from their obligations.
3. A landlord cannot pay reduced levies or mortgage payments because his tenants cannot pay or because he doesn’t earn an income.
4. Some banks are offering relief programmes for property owners. Struggling landlords should consider such offers, but they are not necessarily a given.
1. Only if there is a direct effect on the beneficial occupation, the tenant is entitled to a remission of rental. Indirect effects do not qualify.
2. A tenant who cannot pay rent because of income loss owing to Covid-19 is still liable to pay, as the effect is not direct enough. If, for example, a self-employed person cannot earn an income, the effect is indirect and therefore that tenant has to fulfil their lease obligations.
3. Only if the tenant’s beneficial use of the property is directly affected by force majeure are they entitled to remission. For example, a commercial tenant who cannot use a property for the purpose for which it was let will be entitled to remission of rental for the duration of the lockdown.
The nationwide lockdown is enacted in terms of the Disaster Management Act. The regulations published under this act also impact the rights and obligations of landlords and tenants. Commercial tenants who are now forced to curtail their trading hours experience a direct impact on the beneficial use and enjoyment of the property. Such a tenant is entitled to pay a reduced rental. If, however, the tenant merely is struggling because business is bad in general but has not been impacted directly, the landlord will be justified in refusing to accept a reduced rental. This was the situation before the lockdown, and will be the situation once the lockdown comes to an end. The lockdown also means that many obligations cannot be fulfilled, as illustrated by the following examples:
1. A tenant would not be able to vacate property during the lockdown.
2. A landlord would not be able to give occupation to new tenants during this time.
3. Similarly, an estate agent would not be able to attend to incoming and outgoing inspections.