Commercial Eviction Law

Ever since the inception of the Prevention of Illegal Eviction and Unlawful Occupation Act (“PIE”) and the Extension of Security of Tenure Act (“ESTA”), it has become increasingly difficult to evict what is termed “unlawful occupiers” from residential properties. Has the process for commercial evictions also become overly burdensome?

Firstly, PIE is exclusively for housing usage and finds no application to the removal of juristic persons from commercial premises. Secondly, ESTA also very rarely finds application to commercial property usage. Even if the property being rented is a residential property but for the business use, or a commercial property not for commercial use, the question to ask is “how is the property being used? For residential or commercial uses? This question gives rise to two important aspects to consider:

  1. The first is the use of the term “dwelling or shelter,” neither of which is used to describe a commercial property.
  2. The second is the use of the term “residing” which applies to all persons who, through consequentially means, occupy the property.

There is no piece of legislation that governs commercial evictions and property usage. Therefore, commercial evictions and property usage are (to a large extent) exclusively based on the terms of the lease agreement. There may, however, be other legislation that affects the amounts due in terms of the lease agreement, for example, the Consumer Protection Act and the National Credit Act.

What does this mean for the eviction process of commercial occupiers? Commercial evictions are handled through common law and through the Law of Contract. The first step is to bare reference to the terms of the lease agreement. The time at which a commercial tenant will be susceptible for eviction is based either on the terms of expiration of the lease or the terms of breach thereof. In other words, the lease must either come to its end, or there must be a material breach which gives rise to the Landlord’s election to terminate the lease agreement.

Commercial evictions can either be done in the High Court or the Magistrates Court. Deciding which Court to start the process is a more complex question that requires further consultation with the attorney handling the evictions process.

However, commercial evictions are not limited to the removal of the tenant. Landlords have a right to claim damages and arrear rental that may be due at the time of eviction.

What if your commercial tenant is a recalcitrant one who you are concerned may duck in the middle of the night with all of its movables in order to avoid paying the rental or damages? This is a fear which is shared amongst many landlords (residential and commercial). The process to prevent this is an urgent application which can be brought even in the Magistrates’ Court seeking relief that allows the landlord to attach and secure the movable goods on the property, which makes the act of removing the goods post-attachment a criminal offence. The process is an urgent one and therefore if you are a landlord who current suspects your tenant of behaving in this manner, please consult with us without delay.

The abovementioned scenario is one of the reasons why the hypothec (the landlord’s security) over the tenant’s property is the strongest form of security that exists in our law today. It also has its downfall which is that the security lapses once the movable goods are removed from the premises. It it therefore essential and necessary to act before the horse has bolted because after the movables are removed, the landlord may not rely on its hypothec anymore.

What happens if the tenant enters Business Rescue? The latter process can be best described as the rehabilitation of an entity which is otherwise financially distressed. The process of Business Rescue creates a moratorium which suspends all pending legal action. Whilst the tenant is under Business Rescue, the landlord is not allowed to start eviction proceedings. Naturally, a desperate tenant may employ this procedure as a tactic to delay the inevitable i.e. to prevent the landlord from attempting to claim any arrears, damages, or pursue its eviction. If a landlord suspects this as being the case, it is best for the landlord to approach us as soon as possible to decide on a suitable course of action.

Commercial evictions, by and large, have fewer regulations than with residential evictions. The process is also less onerous and takes less time in the litigations phase than most residential evictions applications, especially if the process takes place in the High Court. However, there are certain essential red herrings for which requires urgent actions by landlords such as dubious Business Rescues and Midnight disappearances. In these instances, please consult with us urgently.

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