A Property24 reader asks:
A Property24 reader asks if he can insert a 'fine' clause in the lease agreement and if the body corporate could include fining in the rules.
As a landlord, am I allowed to insert a 'Fine' clause in my lease agreement that would allow me to 'Fine' the tenant should I receive consecutive complaints (i.e. noise) from the body corporate?
If not, then what are the legal principles behind implementing it at the body corporate level? Currently my body corporate is having problems with noisy tenants and is therefore trying to move to include a fining system in the body corporate rules at the next AGM.
Marlon Shevelew, specialist rental and eviction attorney at Cape-based legal firm Marlon Shevelew and Associates, replies:
The issue of fines is not regulated by the model rules for Sectional Title Schemes.
A difference of opinion exists about whether, in the absence of an amendment to the rules of the sectional title scheme, a fine may be imposed by the Body Corporate for a breach of the rules.
For instance, in the article entitled "Afdwing van deeltitelskemareëls", in the October 2003 edition of De Rebus, Jack Nel finds a statutory basis for the provision of fines in the rules of a scheme in section 38(i), and Annexure 8 r 31(5), r 64(b) and r 70 and Annexure 9 r 3(2).
In addition, in Murcia Lands CC v Erinvale Country Est Home Owners Association  4 All SA 656 (C) it was decided by implication that penalties contained in the constitution of a home owners’ association for not completing a building in a single title development within a specific period of time are enforceable.
Maree 31 (July 2008) MCS Courier 6–7 argues that this case is authority for the proposition that fines imposed in the rules of a sectional title scheme are also legitimate.
However, the recent judgment by a two judge panel in Kenrock Homeowners Association v Allsop and Another (A224/2011)  ZAWCHC 31 (28 March 2012) found that in the absence of an explicit clause in the governing documents granting the body the power to impose a fine (or penalty) - such right does not exist.
It follows that it is questionable whether a Body Corporate may automatically impose fines on persons who breach the rules. The better option is to amend the Conduct Rules of the Sectional Title Scheme to explicitly provide for the imposition of fines - after which there will be little difficulty in doing so.
The next issue is whether a landlord may fine a tenant for breaches of the rules. The Consumer Protection Act regulations generally prohibit terms "requiring any consumer who fails to fulfil his or her obligation to pay damages which significantly exceed the harm suffered by the supplier ..."
If the Body Corporate has not adopted a rule in terms whereof the landlord is held liable (through a fine) for the actions of the tenant - it would arguably breach the above if the landlord could fine the tenant - where the landlord has suffered no monetary harm.
In contrast, however - if the Body Corporate fines the landlord - the landlord would be entitled to insert a clause into the lease agreement requiring the tenant to pay such fine. The reason being - in such case - (a) the tenant has failed to fulfil an obligation, and (b) the landlord is only recovering the amount of the harm actually suffered by him as a result of the breach.
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