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Lease Agreements

Lease agreements and Legislation

Until recently the relationship between landlord and tenant in Namibia was more or less regulated by the Rents Ordinance No. 13/1977, which provided inter alia for the establishment of Rent Boards. This Ordinance regulated the relationship between landlord and tenant and the Boards were empowered to investigate any complaint and to consider possible applications for the increase or decrease of rent by any lessor or lessee. The Ordinance applied to all lease agreements, whether to business premises or to dwellings. The Ordinance however provided in Article 35 thereof that the provisions thereof would not apply to any dwelling situated in an area for which no Rent Board has been established.

After 1991, all Rent Boards ceased to function and consequently, the Rents Ordinance has lost its power and, although it still exists, it is only applicable to business premises. In case of lease of a business premise, the rent ordinance has specifications that must be followed strictly regarding the notice period which can only be amended by separate addendum to the lease agreement. This differs substantially from notice periods of ordinary residential properties.

Today the Common Law, which allows full freedom of contract, is the basis for Landlord and Tenant relations and for a lease agreement the basic contractual formalities are applicable when you draw up the lease agreement in writing.

A written (signed) lease agreement must contain at least the following:

  • Names and addresses of the parties.
  • Proper description of the property.
  • The rental amount, when is it payable and the reasonable escalation thereof;
  • Any other costs the tenant is responsible for.
  • The frequency of payments and also if payments are in arrears or in advance.
  • The deposit amount, what the amount is, whether it will be invested and if the tenant will get interest on the amount at the end of the lease period, what it may be used for, etc. Note that the deposit amount is usually equal to one or two months lease amount.
  • The lease period (start and end) as well as extension thereof.
  • Written report and condition of property with a list of defects.
  • Maintenance of the property and the lessee’s duty to restore the leased premises to the lessor on termination of the lease.
  • Notice period for termination and the requirements for notices.
  • General rules regarding use of the premises.
  • Sub-letting and cession.
  • Possible addendum to the contract dealing with furniture.

The most common reason for a written agreement is to ensure that both parties are 100% sure about what is to be expected from them and what their rights and obligations are and furthermore to give clarity in case of disputes. Most of the above terms of the lease agreements can also be freely negotiated between the parties. The agreement would also include issues such as the maximum number of residents (not visitors), use of the premises, initial rent, the increase thereof during the lease term, initial period of lease, extension thereof, breach and eviction, maintenance, and insurance, as well as the payment of water and electricity. Interesting point is the fact that the common law a duty to mitigate losses upon the landlord where the tenant is in breach can be excluded in the lease agreement.

Although one year leases are customary, leases are often either longer or shorter. A fixed term contract simply runs out at the end of the tenure; the lessee has no further right to occupy the property.

If no termination date has been established a “reasonable” period of termination notice is required, which will be measured against the time it would normally take to re-let the property. Three months for residential properties would be acceptable unless there are specific circumstances which would render it unreasonable.

If you plan to lease your property to more than one person, make sure to contract all the parties and specify that they are jointly and severally liable in respect of the lease agreement. In the case of a dispute you can take action against each individual. Should your tenant be a company or close corporation it is also a good idea to bind the directors or members as surety in terms of the lease agreement.

One of the risks of renting premises is the possibility of unforeseen circumstances arising that make it necessary (or perhaps just advantageous) for the tenant to vacate before the end of the lease. To provide an escape route for the tenant in such a case, leases commonly allow the tenant to sub-let the premises, but, to in turn protect the landlord, this should only be possible with the landlord’s specific written consent.  Keep in mind that the landlord’s right to have his premises used or occupied in a desirable manner and furthermore as agreed upon in the original lease agreement.

Note that a “sub-lease” should not be confused with an outright cession of the lease to a new tenant.  With a sub-lease, the tenant remains just that – the tenant - and therefore remains fully liable for compliance with the original lease.  With a cession, the original tenant falls out of the picture, being replaced by the new tenant.  Take advice if it isn’t clear which option suits you best.