Why a long term lease should be registered?

20 April 2018 ,  Madeleine Goldie 2049
When it comes to immovable property in South Africa, we tend to focus our attention on the sale and transfer of ownership, and the short-term rental or lease of a property. However, there are other forms of title to property in South Africa, such as long term leases.

In contrast to a deed of sale of property, it is not a requirement that a short term lease or rental of a property must be in writing. Such a lease agreement shall therefore be valid irrespective of it being in writing or not.

A long term lease is a lease agreement of property –

1.    for a period of not less than 10 years; or
2.    for the natural life of the lessee or any other person mentioned in the lease; or
3.    which is renewable from time to time at the will of the lessee, indefinitely or for periods which, together with the first period amount in all to not less than 10 years

It is important to note that long term lease agreements shall only be valid against the creditors and/or successors in title of the lessor for a period exceeding 10 years after having been entered into,  if the lease agreement has been duly registered against the title deed of the property concerned. Therefore, in cases where a long term lease is registered, the lessee is protected from the date of registration.

A lease agreement can evidently only be registered in a deeds registry if it is in writing. Both the lessor and the lessee will sign the agreement , which signature must be attested by a notary public. It is also customary practise that the parties sign in the presence of two competent witnesses. The lease agreement will be registered in the same deeds registry where the property itself is registered.

Unencumbered ownership of immovable property remains the strongest form of title and interest to property in South Africa, enforceable against third parties as it entitles the owner to use and enjoy the property as desired (within the confines of the law) and for an unlimited duration. In contrast, a long term lease encumbers or limits the rights of the owner and affords the lessee a real right.

In summary of the above a registered long term lease agreement will provide the lessee with a real right which is enforceable against the lessor and all third parties for the entire term of the agreement even exceeding the term of 10 years.

If you have thus negotiated a long term lease with beneficial terms that is not registered against the title deed of a property, the chances are that the agreement may not be enforceable for the entire term of the agreement.