Landlord’s tacit hypothec – what it means for lessees and their goods

Apr 14, 2016 | 2015, News

The landlord’s tacit hypothec is a form of real security recognised in South African law. The hypothec is “tacit” because it is understood or implied without being stated; in other words, the hypothec comes into effect by operation of law and not by agreement between the Landlord and Tenant.

The hypothec secures the lessee’s obligation to pay the rent in terms of the agreement of lease. It does this by allowing the landlord to burden the movables present on the leased land or while in transit to a new destination subsequent to the removal from the land.

What this means is that the Landlord is able to obtain a limited real right in the movable goods present on the property on the date that rent is in arrears. However, this right does not accrue to the Landlord automatically; it first needs to be perfected. In other words the landlord has to obtain an interdict restraining the removal or sale of the goods on the property pending an action for rent or an order for their attachment by the court.

Importantly, the hypothec does not apply to goods removed from the premises before the hypothec is perfected. In certain instances the movable goods belonging to third parties can also fall under the hypothec, but only to the extent that the movable goods belonging to the lessee are insufficient to satisfy the arrear rental. For this to happen the Lessor will have to show that the aware and consented to the presence of the goods on the premises, that the landlord was unaware that they belonged to a third party and that the goods were bought onto the premises for permanent use by the lessee.