Why Occupation Should Only Begin After the Lease Agreement is Signed and Delivered

When leasing industrial or commercial property in South Africa, it is essential to understand the legal and practical implications of taking occupation. One of the cardinal rules is to occupy the premises only after the lease agreement has been signed by both the landlord and the tenant, and the fully executed document has been delivered to the tenant. This practice is vital for ensuring legal protection and preventing potential disputes.

Legal Protection

A lease agreement is a legally binding contract that defines the rights, obligations, and responsibilities of both parties. Without a signed agreement, there is no formal record of these terms. Occupying the property prematurely could leave the tenant vulnerable to:

Unfavourable terms: The landlord might later impose terms that the tenant may not agree with, such as unexpected rent escalations or additional charges.

Eviction risks: Without a signed lease, the landlord can claim that no tenancy exists, which could result in eviction without recourse.

Clarity on Terms and Conditions

The lease agreement typically outlines critical details, including:

- The commencement and termination dates of the lease.

- Rental amounts and payment schedules.

- Maintenance responsibilities.

- Permitted uses of the property.

Taking occupation before the terms are clearly defined could lead to misunderstandings or disagreements that could harm the tenant's business operations.

Avoiding Financial Loss

Starting operations without a signed lease can have severe financial consequences. For example:

- The landlord could demand immediate vacating of the property, leading to unexpected moving costs or business disruptions.

- Any improvements or installations made by the tenant could be at risk if no agreement protects these investments.

Mitigating Disputes

Disputes are easier to resolve when both parties can refer to a signed lease agreement. The document serves as the definitive reference point in case of disagreements about the tenancy, rent, or property use. Occupying without it increases the likelihood of disputes becoming costly and protracted.

Best Practices for Tenants 

To avoid complications, tenants should:

1. Insist on a fully signed and delivered lease agreement before occupying the premises.

2. Review the lease carefully with the assistance of a legal professional to ensure it aligns with their needs.

3. Verify the landlord's ownership of the property through deeds or municipal records to avoid fraud risks.

4. Request a copy of the signed lease agreement for their records.

Conclusion 

In South Africa, the principle of "occupation only after the lease agreement" is not just a formality; it is a critical step in protecting your legal and financial interests. By adhering to this guideline, tenants can avoid unnecessary risks and focus on successfully running their businesses in their new premises.