Can I force my tenant to trade?

2019-04-03 06:01
Venessa Vorster

Venessa Vorster

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Question:

I own a small shopping complex.

A key tenant, who must give six months’ notice if he does not renew his lease, has just given notice.

I do not have a problem with that, but with months to go before he exits, he has now stopped trading.

This will have a big impact on feet to the complex if he does not trade and I have asked him to continue trading until he vacates the premises, but the client refuses and says he is cutting his losses.

Can I force him to trade for the remainder of the lease agreement?

Answer:

Whether you can force the tenant to continue trading all depends on the terms of your lease agreement.

In the case of Edcon Limited v Bay West City (Pty) Ltd, a landlord sought to force the lessee to continue trading after the latter gave notice that it would close its shop due to financial reasons.

The lessee did, however, continue to pay rent and maintain the premises.

The landlord argued that, in order to attract customers and remain competitive in the market, tenants could not be allowed to simply close their doors whilst paying rent and are thus required to trade.

However, the court dis­agreed and held that as long as the tenant honoured the lease, the landlord could not insist that the tenant conti­nue trading where a term in the lease requiring the lessee to do so, did not exist.

It further held that, should the lessee be obliged to carry on business for the full duration of the lease, even when suffering a loss, such onerous terms must be stipulated in the lease either expressly or by implication.

Accordingly, unless there is a clear provision in your lease agreement that obliges the tenant to keep trading at full capacity for the remainder of the lease, you will not be able to force your tenant to continue trading.

However, should there be such a provision, you may be able to force your tenant to honour the agreement and continue trading.

It is accordingly advisable that you consult with your attorney regarding the lease agreement and to what extent it provides for the obligation to trade or continue trading during the period of notice.

It may also be worthwhile to review all your other lease agreements to determine if the aspect of trading is adequately dealt with in your leases.

– Venessa Vorster, candidate attorney, Phatshoane Henney Attorneys

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