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How long can commercial landlord hold my deposit?

29 Sep 2015

A Property24 reader asks:

A Property24 reader asks how long the landlord can hold onto her deposit after she has vacated a shop in a centre.

How long can an agent/owner hold a deposit after I have vacated a commercial property (shop in a shopping centre), where the new tenant has moved in and has already started trading?

Henno Bothma, an Associate at Abrahams & Gross Attorneys, advises: 

Commercial leases differ from Residential leases, in the sense that there are not any laws specifically regulating the relationship between the parties. In the case of Residential leases, the Rental Housing Act, 1999 [Act No.50 of 1999] is applicable. Section 5(3)(m) states that the deposit, less any deductions, must be refunded within 21 days.

The position with Commercial leases differs somewhat, and it is usually left for the parties to determine, by way of a mutually agreed term in the lease agreement, what the time period for the refund of the deposit will be.

In the absence of such a clause in the lease agreement, the general notion of “a reasonable amount of time” would be applicable. For instance, if extensive repairs are needed, the Landlord might hold onto the deposit for a longer period, whilst the repairs are done, in order to ensure that it covers the full amount of expenses before repaying the remainder thereof. If there are not any repairs to be done, and in cases where the Landlord is taking unreasonably long, the previous tenant may place the Landlord in “mora”, by demanding the balance of the deposit within a certain period. A reasonable time is usually 7 days. If the Landlord then fails, without good reason, to refund the deposit to the tenant, the tenant should consider taking legal steps for the recovery thereof.

Readers may submit questions to Property24’s Guest Expert panel and/or comment below. We may not be able to answer all questions received, but all will be considered.

About the Author
Henno Bothma

Henno Bothma

Henno Bothma is an Associate at Abrahams & Gross Attorneys. He specialises in Commercial Litigation and Insolvencies, as well as Criminal Law. Visit www.abgross.co.za.

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