Landlord’s tacit hypothec – A right linked to property

Landlord’s tacit hypothec – A right linked to property

The relationship between a landlord and their tenant is not often smooth, more so when the tenant fails to pay rent. In that event, a landlord’s tacit hypothec comes into existence and remains in existence for so long as there is outstanding rental which is due and payable.

A landlord’s tacit hypothec gives the landlord a limited real right in movable property found in the leased premises when the rent is due but has not paid. It is called a “tacit” hypothec because it does not come into existence by agreement between the landlord and the tenant but by operation of the law.

This right is not just there for the taking. It first has to be perfected. The landlord would have to institute a court application seeking an order interdicting the tenant from removing or selling the movable property in the leased premises, pending an action to be instituted for payment of arrear rentals. In the application, the landlord should seek an order for the attachment of the property.

The landlord must perfect the hypothec whilst the property is still in the leased premises. If it so happens that the property is thereafter removed from the leased premises, the hypothec will not cease to operate. However, if the removal of the property was effected before the judicial attachment, the hypothec would be lost.

In the case of Sax Investments (Pty) Ltd & another v Tlale Holdings (Pty) Ltd and another 2010 (2) BLR 532 HC the Court cited with approval, the following passage by the learned author W.E Cooper, The South African Law of Landlord and Tenant (2nd ed Juta & Co Cape Town 1994) at p192:

“To render his hypothec legally effective, a lessor must by judicial process perfect his hypothec over the invecta et illata (things carried in and brought in) while they are still on the hired premises.”

Most importantly, it is worthy to note that section 5 of the Tacit Hypothec Act (Cap 12:01) states that the tacit hypothecation possessed by landlords or letters to hire of fixed property shall not be claimable for any sum greater that one whole year’s rent or hire of the premises in regard to which such hypothecation is being claimed.

This essentially means that a landlord can only exercise a hypothec for a sum not greater than one year’s rental and the attached goods should not be in excess of that sum.

Nyaradzo Mupfuti | Senior Associate