What implications does a lien have on eviction proceedings: Part 1.

In conflicts between property owners and tenants seeking compensation for property improvements before leaving, eviction proceedings are possible, but success depends on location and lease terms.

“I have been renting out my property to tenants for the last couple of years and the time has come for them to vacate the property. The tenants, during the period of their lease, effected certain permanent extensions and renovations to the property and now refuse to vacate the property unless I reimburse them for the extensions and renovations that they made to my property. What are my options as the property owner?”

The relationship between owners and tenants can become strained when the lease agreement comes to an end and there exist disputes between the parties, especially when such a dispute relates to who is to be held liable for the extensions, renovations and/or building work (hereafter collectively referred to as “improvements”) that have been made to the owner’s property by the tenant. Some tenants may argue that they have a lien over the said property until the owner reimburses or compensates the tenant for such improvements.

A lien is defined as a right that the retentor (in these circumstances, the tenant) obtains when they are in possession of another person’s property (in these circumstances, the leased property) and effects or performs work or spends money on such property. The right, which the retentor acquires, is to retain the property in their possession as security for payment from the owner of the value of the debt that accrues due to the improvements or maintenance effected on the property.

Considering the above, there are a few factors that need to be established to answer the question of what the rights of a property owner are when tenants refuse to vacate the property. Firstly, the property owner will need to disclose whether the property being rented is situated in a rural or urban area. The second question will be what terms were agreed to when the lease was concluded between the owner and the tenant. The respective answers to the above questions will be discussed in separate articles.

Regarding the first question: In the 17th century the Estates of Holland promulgated the placaeten, which determined that a tenant who leases immovable property which is situated in a rural area does not have a lien over such property if they made any improvements thereto. The tenant thus cannot raise the existence of a lien as a defence to eviction proceedings instituted by the owner of the property, and the tenant will be required to vacate the property immediately without considering the improvements made to the property. The tenant will, however, have the option to institute a claim for the value of the improvements made at a later stage. This principle was confirmed by the court in the case of Business Aviation Corporation (Pty) Ltd and another v Rand Airport Holdings (Pty) Ltd [2007] 1 All SA 421 (SCA).

The court further found that the placaeten does not apply to property situated in urban areas. As a result, a tenant who rents property that is situated in an urban area, and who effected improvements to that property, may allege the existence of a lien over the leased property in their favour. Consequently, if eviction proceedings are instituted by the property owner against the tenant, the alleged lien is a factor that the court will consider in such eviction proceedings, and which may carry substantial weight in the circumstances.

In conclusion, tenants who have made improvements to an owner’s property in a rural area cannot claim a lien in their favour to retain the property, and this argument holds no weight in eviction proceedings once they’ve been initiated. On the other hand, a tenant who made improvements to an owner’s property situated in an urban area will not suffer the same fate, as the tenant’s lien will carry weight in eviction proceedings brought against them.

However, it is important to note that the outcome of the aforementioned scenario may vary depending on the terms of the lease agreement concluded between the owner of the property and the tenant prior to the improvements having been made to the property.

Thus, a property owner in both abovementioned scenarios will be able to institute eviction proceedings but the success of the proceedings may vary depending on whether the leased property is situated in an urban or rural area. Regarding lease agreements concluded for properties situated in urban areas, the outcomes may differ further based on the specific terms which the tenant and owner agreed to in the lease agreement. This will be discussed in part two.

Reference list:

United Building Society v Smookler’s Trustees and Golombick’s Trustee 1906 TS 623 at 627 – 628.
LAWSA vol 15 par 54.
The principles contained in the placaeten have been found to be accepted and received into South African law.
Eviction proceedings in rural areas are done in terms of the Extension of Security of Tenure Act, 62 of 1997.
Eviction proceedings in urban areas are done in terms of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, 19 of 1998.

While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither the writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.

Powered by Succeed Group