Asked by Marie on 13-11-2021 19:48:33
Question posted in the Landlord Tenant Law category relating to Gauteng

Good day, my dad had property for his retirement. On that he then expanded by building some more apartments onto this existing property. It was not up to standard but ideal for low income tennants. He drew up a contract between himself and a second party (George) to the effect that the second party must collect the tennants' rent for 20 years (R10000 pm) whichafter this property will become his own. The paperwork for tracking wasn't up to date and some were destroyed in a fire but the fact is the contract started in 2006. It was a casual sort of agreement and George did not pay the rent every month (breach of contract?), but he would in return do favours like fixing problems in the house. I must highlight that we do not have clear records of what was actually payed My father has 6 childen. My father - Gert - passed away in 2013. In 2016 the family had a meeting and decided to set up a new contract. But they did not negotiate with George on how much he had already paid but the new contract charged him the same amount as 10 years ago - R950,000!!!!

The family now wants to send him a lawyers letter for money in arrears and if he defaults on that will put him out. What advice can I get in defence of George?

Posted by Att. Patrick on 13-11-2021 21:13:06

Hi there, 

I am a practicing attorney based in South Africa and I will assist you with your question. Please feel free to ask as many follow up questions in order to clarify your question. If you have a new question, you must please open a new thread.

This is a request for information so that I can understand your question and give you a proper answer.

Did the new contract replace the old contract? In other words, did you guys ignore (or write off) the arrears and simply say that George needs to pay R950,000 (ignoring what he previously paid) in order to get the property?

Awaiting your further information.

Att. Patrick

Hi Patrick, sorry I only get back to you now. I saw your answer on my phone today but did not now where to reply.
After my father's death in 2013, we had a family meeting and decided to arrange a new contract as my fathers contract wasnt done by a legal person and was not so up to standard.
During the first contract from 2006 to 2016 George was in arrears but the detail is unknown. He did not pay the amount in arrears but my dads deal with him was for 20 years! And by then in 2016 halve of this period had already expired. My one brother is an attorney and the other a CA so they organised the contract with exactly the same price as 10 years before without negotiating with George about the lost time and money. Is this right?
Currently the amount is over 1 mill and he now makes regular payments but to me this is rediculous even though I also benefit.
George is a very hardworking man and cannot afford legal assistance. What can he do.
Oh yes, the new contract started in 2016 and between thenand 2018 he fell into arrears again.
Thanks Marie

Posted by Att. Patrick on 15-11-2021 11:17:28

If the agreement was that George should collect the rental for 20 years, and then the property would become his own, that would be R10,000 x 12 x 20 = R2,4m.

You say that he made (or sometimes made) payments for the first 10 years to your late father, and then (in 2016) your brothers put a new contract into place. 

Surely the new contract should then have been for 1/2 of the R2,4m?  I.e. R1,2m?

So, if George is getting it for R950,000, he is probably getting a good deal? 

Ultimately, a court will enforce any agreement which parties enter into, even if that agreement is not really fair. 

If George has fallen into arrears again, he needs to watch out, because your brothers could technically cancel this agreement and refuse to transfer the property to George, and basically kick him out. 

Thank you for all your help. I spoke to George today. He says the purchase sum inthe 1st contract was R950k. But he also did not always pay his monthly instalments. Him and my dad had a special kind of relationship and some of the rental monies were used to fix things om the property.
Could the fact that he also was in arrears during the first contract justify the new contract to ask exactly the same price?
Thank you so much for your help

Posted by Att. Patrick on 15-11-2021 17:40:30

Yes, definitely yes. Also, the fact that there are no proper records which can be referred to. If both you guys and George was happy with the second contract, then there is nothing wrong with it.