Tenancies Based on Verbal Agreements
Just as rental units are commonly rented with verbal tenancy agreements, so too are rental units commonly vacated on the same terms. Verbal tenancy agreements are quite common and under the right circumstances, they can be just as binding and enforceable as their written counterparts.
The first step in assessing a verbal tenancy agreement and considering an eviction based on its breach is to look at the terms of that verbal tenancy agreement. Verbal tenancy agreements can be more difficult to prove and establish. They are grounded on a somewhat shaky foundation, namely the recollection of words spoken at a previous point in time. That said, there are various ways of establishing such agreements. These include verbal testimony, documentary evidence of a prior oral agreement and third party verification. Such evidence should be clear, cogent and compelling.
When examining a verbal tenancy agreement, one must recall that such agreements are co-extensive to, and as binding and enforceable as, written tenancy agreements. This means, for example, that if a verbal tenancy agreement has been made to rent a residential unit within the provincial jurisdiction of a specific tribunal such as the Residential Tenancies Act or its equivalent, the terms and conditions of that verbal agreement must be in compliance with the provisions and relevant regulations of that Act. As well, consider whether other kinds of tenancy agreements are governed by the terms of the verbal tenancy agreement. For example , is the rental unit used as a dwelling or is it being used as a place of business? Does the agreement allow for sublets and/or assignment? Are further its terms and conditions required to be reduced to writing and filed with a specific tribunal for enforcement purposes?
Assuming the legal terms and conditions of a verbal tenancy agreement have been violated, the inquiring commercial litigant must then consider whether a remedy exists in the words and provisions of the agreement itself and the governing laws, rules and regulations. Is the matter truly one of breach or is it not an innocent act of negligence in which the tenant simply failed to comply with the terms and conditions of the verbal tenancy agreement? If the tenant is acting in good faith in attempting to repair the breach, is there still a remedy in law? Indeed, are there no extenuating circumstances that would warrant the defence of estoppel or waiver?
Ultimately, a verbal tenancy agreement is only one aspect of a multi-faceted eviction scenario. The terms and conditions of the agreement, the manner in which it can be proved and established and its enforcement and enforcement remedies all combine to determine whether the interests of the landlord and/or tenant will be protected. As such, whether the breach of a verbal tenancy agreement by the tenant provides grounds for eviction, will depend on whether the violations of those terms and conditions were substantial to the relationship and its goals and objectives.
Challenges of Tenancies With a Verbal Agreement
To prove the terms and conditions of a tenancy agreement in court is essential for establishing a tenant’s liability for rent, damage and disrepair, and for getting an order for possession. With a written agreement this is easy. But with a verbal agreement it is not. Most landlords or letting agents will not keep evidence of a verbal tenancy agreement, this is usually seen as unprofessional and not in accordance with their conduct. So for landlords, something that seems perfectly normal in the course of their business can be seen as improper by the courts.
Lots of landlords, especially those who don’t do things the right way all the time (see our blog on getting an EPC) end up agreeing things proportionately to avoid the paperwork and hassle. In cases where the agreement has just been verbally agreed this becomes a problem. The difficulties for the landlord are compounded by the fact that formally proceeding to enforce the verbal tenancy agreement means paying court fees and is a more drawn out process than is usually necessary. In particular, when getting an order for possession landlords need to give the court 2 months’ notice, which can be too long for them to wait to get their property back.
Once you actually get to court and off to trial the veracity of the oral agreement comes into very sharp focus. A tenant with nothing to lose will deny the whole tenancy agreement out of hand and hand over to prosecutors the task of proving its existence. The problem is that it is not so simple for the landlord to prove that it exists. He can’t just give the judges blanket evidence of all sorts that might seem useful in proving the agreement – as you do in a written agreement. The reasons for this are:
1 The Tenant Fee Ban. First, the court hearing must be focused on the subject matter to be proved, in this case, that the verbal tenancy agreement exists. The judge can then only consider relevant evidence in his enquiry about the tenancy agreement. The new Tenant Fees (Payment) Order 2019 expressly prohibits a fee from being paid to the court to produce evidence.
2 Under the CPR, there is a rule that says that if there are to be several hearings in a case the court can strike out a statement of case or application document on the ground that it is likely to increase the costs or there is another reason why it should not be allowed to proceed or considered further.
3 Case Management Directions. Another rule under the CPR gives the judge, at a first hearing, discretion to give directions about how the case should continue. These directions can include having only one hearing with all the evidence considered at that hearing.
4 Another important rule at trial is that, in order for evidence to be considered by the judge, it must be disclosed in advance of the trial. Basically, if it was not given to the judge before the first hearing, it can’t be used in evidence later in the case. A witness who does not attend court cannot give evidence. What the witness says cannot be put to the other side and is hearsay evidence. Hearsay is generally inadmissible as evidence and cannot be taken account of by the judge.
If the landlord cannot prove that the oral agreement exists, the court’s jurisdiction is lacking and the case is likely to be dismissed.
This might seem like an unhelpful result for landlords but it is one they have to live with because they did not take the trouble at the outset to reduce the agreement to writing.
Legal Reasons for Eviction Under a Verbal Tenancy Agreement
The grounds for eviction of a tenant who has been renting on a verbal tenancy agreement will depend on the type of agreement in place. There are four options to choose from and they will be discussed below.
Weekly and monthly contracts
There is case law holding that it is permissible for a landlord or tenant to terminate a weekly or monthly contract without notice, even though there is no express term in the contract permitting this. It is stated that parties may contract in such a way as to dispense with the formalities of a notice period. The parties are then free to apply to court for an eviction order in terms of PIE – the court will consider the circumstances of the case and what justice and equity demands.
The decision that a party can dispense with the notice periods was made in Bheekie and others v Kriel and others (CE1988) 9 ILJ 497 (LC). In this case, the applicants occupied the premises in terms of a verbal agreement.
The court in Hefer v Davis 1945 2 All SA 286 (C) held that where there is a verbal agreement between a lessor and lessee, nothing is more intuitive than to expect that either party should be able to communicate one way or another that by the next week or by the next month the letting would come to an end.
If it is decided that the contract is terminable on any day of the week or any day of the month without notice, a landlord or a tenant will be effectively entitled to act by implication. However, in those circumstances there would have been a tacit term of the agreement that either party would be entitled to terminate the agreement on any day of the week or any day of the month.
Yearly contracts
A landlord or tenant cannot ordinarily terminate a yearly contract without notice, unless the parties agree otherwise. If a landlord or tenant wishes to terminate the contract without notice, it must be provided for in the contract, as the contractual stipulation must take precedence over the right of the parties to dispense with the usual notice period. A court application for eviction in terms of PIE/URAA could be made.
The judgement in City of Johannesburg v Morgan and others 2010 JDR 0534 (W) refers to the case of Roodburg v Botha; Roodburg v Roodburg 1948 (3) 351 351 (C), which states that if the parties enter into a verbal agreement for a year during January, they will be obliged to give one another a full calendar month’s notice, which permits the parties to arrive at terms that are fair and reasonable.
In the case of Vakhelwa v Unlawful Occupiers, and Rand Properties Limited v Lekoma Security Services CC 2013 (5) SA 539 (SCA), the SCA dealt with the issue of whether a contract for a fixed term, for example a lease for a year, may be terminated without notice. It was held that a lease based on a year-to-year contract is terminable only on the giving of a month’s notice that must coincide with the anniversary of the date on which the lease commenced.
Terminations set out in the contract
A landlord or tenant may also provide for termination in circumstances other than lapse of a day or month or expiry of the contract and contractually determine when the contract will expire. The landlord and tenant must not have expressly agreed to terminate after a certain number of days or months of notice. If the parties provide for termination after a certain number of days or months of notice, it will be necessary for the notice to be given in terms of PIE/URAA and have a reasonable time period.
How to Prove the Existence of a Verbal Tenancy Agreement
In the absence of written documentation, the introduction of witnesses at trial is the most effective means of establishing the terms of a verbal tenancy agreement. The witness might be a third party with knowledge of the existence and terms of the agreement, such as a person who brought rent payments to the owner, took care of the rents collected, or kept track of the party’s payments on the property. A building superintendent is often effective as a witness at a hearing. Another possibility is evidence of the actions of the landlord and tenant, such as by way of photographs showing the tenant in possession of the property, rent cheques endorsed by the tenant, communications between the landlord and tenant (by way of a text , for example) or other documentation that demonstrates the agreement and the terms agreed to by the parties.
A positive decision of the Court on an application to evoke a tenancy agreement usually requires that the landlord establish not only the existence of the tenancy agreement and its terms, but also that the tenant has breached a term of that agreement. That is, it is not sufficient to establish that the applicant is the owner of the property being rented and that the respondent is in possession of the property. In addition, the applicant must prove that the respondent has not paid rent because he has no obligation to pay rent and, therefore, to take steps to evict him for default on payment of rent. Indeed, more than one positive decision of the Court has been overturned on appeal because the Judge hearing the appeal found that the evidence led by the landlord did not establish a tenancy agreement between the parties.
Legal Steps to Eviction
The procedural requirements for evicting a tenant with a verbal tenancy agreement are largely the same as for a written tenancy agreement. Generally, a landlord must provide the tenant with a notice of termination before a landlord may initiate eviction with the local Court. Before providing such notice of termination, however, a landlord should review their lease agreement to determine whether the agreement withholds the giving of notice for rent arrears or other breaches. Tenants are entitled to a notice of termination even where their lease provided that their landlord could withhold notice.
Once the tenant has received the notice, the tenant may either comply or respond. In the event that a tenant complies by vacating a rental unit, the landlord will not need to apply to the Assessment Review Board. Should the tenant pay the arrears or remedy the breach, any default (rent arrears or other breach of the lease) will be cured and the tenant may reside in the rental unit. If an issue goes unresolved and the tenant does not vacate, the landlord may commence an action to evict the tenant. Typically landlords with a verbal agreement will present evidence to the Board of the tenancy. This may be done through witness testimony or the production of some other tenancy agreement.
Evictions – Tips for Tenants and Landlords
In the case of verbal tenancy agreements, both tenants and landlords should take extra care to protect their rights.
Tenants – A tenant under a verbal tenancy agreement should:
It is also important to verbalize to your landlord that you refuse to vacate the premises on the set eviction day. Verbalizing that refusal puts your landlord on notice, making an early eviction less likely.
Landlords – A landlord who enters into a verbal tenancy agreement should:
Tenants under verbal tenancy agreements are entitled to legal protections. If necessary, a Tenant Protection Order can be obtained from the Superior Court to prevent eviction by Notice to Vacate. This order can result in the landlord being found in breach of the Landlord and Tenant Act , and can prevent them from evicting the tenant until the issue is resolved.
This legal protection does not only apply to tenants under verbal tenancy agreements. If the tenancy agreement is not in writing, the tenant may be entitled to a Tenant Protection Order. This is an equitable remedy that aims to avoid hardship to the tenant if an eviction would cause undue hardship.
The Order may also not be issued in cases of cruelty. If there is a unilateral refusal to pay rent, or where the landlord would suffer significant hardship as a result of the Order being issued, then the Order may not be issued.
Ultimately, whether or not a Tenant Protection Order is issued will be determined by the specific circumstances of each case.