For many businesses, the lease is one of the largest and longest commitments they make. For landlords, it is the document that determines whether a property produces a reliable income or becomes a source of disputes. Yet commercial leases are often signed on the landlord’s standard form with little negotiation, and the parties only read the detail when something goes wrong.
Unlike residential leases, commercial leases are not governed by a single statute. They are regulated mainly by the common law and by what the parties agree. That gives the parties a lot of freedom, but it also means that a poorly drafted clause, or a missing one, can be costly.
A 2025 judgment of the Western Cape High Court illustrates the point. A restaurant tenant believed it had renewed its lease, but because the rental for the renewal period had never been agreed, the court found the renewal clause unenforceable and granted an urgent eviction order. This article covers the clauses that most often cause problems and what landlords and tenants should look for.
Which laws apply?
The Rental Housing Act 50 of 1999 applies to residential leases, not commercial ones. The Consumer Protection Act 68 of 2008 (CPA) can apply to a commercial lease where the tenant is a natural person, or a juristic person whose asset value or annual turnover is below the threshold set by the Minister, currently R2 million. Where the CPA applies, it can affect clauses such as early cancellation and unfair terms, although certain protections, such as the right to cancel fixed-term agreements under section 14, do not apply where both parties are juristic persons.
The Formalities in respect of Leases of Land Act 18 of 1969 is also relevant. A long lease, generally one of ten years or more including renewal periods, should be registered against the title deed by notarial lease to protect the tenant fully against later owners and the landlord’s creditors.
The common law adds important default rules. For example, the landlord must maintain the premises in a condition fit for the purpose for which they were let, unless the lease shifts that obligation. The landlord also has a tacit hypothec over certain movables on the premises as security for arrear rent.
The key clauses
Premises, term and occupation
Describe the premises precisely, including the lettable area, parking bays and any shared areas. State the commencement date, the term, and whether there is a beneficial occupation period for fit-out before rent starts. Tenants should check what happens if the premises are not ready on the agreed date.
Rent, escalation and other charges
Record the basic rent, the annual escalation, and exactly which other amounts the tenant pays, such as operating costs, rates and taxes, utilities, refuse removal and marketing contributions. Tenants should ask how recoverable costs are calculated and whether they can be increased without limit.
Deposit, guarantees and suretyship
Landlords commonly require a cash deposit or bank guarantee, and often a personal suretyship from the tenant company’s directors. Directors should understand that a suretyship makes them personally liable for the company’s obligations, often for the full term and any renewal.
Permitted use, zoning and exclusivity
The lease should describe the permitted use, and the tenant should confirm that the zoning and any consents allow it. Retail tenants may want an exclusivity clause preventing the landlord from letting nearby premises to a direct competitor. Trading hours obligations in shopping centres should be checked carefully.
Maintenance, repairs and alterations
Many standard leases shift most maintenance to the tenant, including structural or roof repairs. Tenants should ensure they are not responsible for latent defects or for capital items such as air-conditioning plant. The lease should also deal with alterations, who owns improvements, and whether the tenant must reinstate the premises at the end.
Renewal options
This is where the 2025 judgment in Tower Property Fund (Pty) Ltd v Liguria Ristorante (Pty) Ltd is instructive. The lease gave the tenant an option to renew for three years, but the renewal rental was left to be agreed. When the parties could not agree, the court held that this was an “agreement to agree”, which is unenforceable unless the lease provides a mechanism to break the deadlock. Because rental is a material term and there was no agreed figure or method, no renewal had been concluded, and the tenant had no right to remain in occupation.
A renewal option is only valuable if it can be enforced. It should specify how and by when it must be exercised, and how the renewal rent will be determined, for example by a fixed escalation or by an independent valuer if the parties cannot agree within a set period.
Breach and cancellation
The lease should set out what happens on breach, including the notice period to remedy it and when the landlord may cancel. Tenants should look for a reasonable remedy period. Landlords should note that if the lease is cancelled and the tenant refuses to leave, they need a court order to evict. Changing locks or cutting services without a court order can result in a spoliation order against the landlord.
Assignment, subletting and sale of the property
Most leases prohibit cession, assignment or subletting without the landlord’s consent. Tenants who may sell their business should negotiate that consent may not be unreasonably withheld. Under the common law principle that a sale does not break a lease, a new owner of the property generally steps into the landlord’s shoes, subject to the registration rules for long leases.
Damage, interruption and force majeure
The lease should deal with rental remission if the premises are damaged or cannot be used, and what happens if trading is prevented by events outside the parties’ control. Many businesses discovered the importance of these clauses during the COVID-19 lockdowns.
Checklist before signing a commercial lease
- Confirm the exact premises, area, parking and the zoning for your intended use.
- List every amount payable besides basic rent and how each is calculated and escalated.
- Check who is responsible for structural repairs, latent defects and major equipment.
- Make sure any renewal option has a clear notice period and a method to fix the rent if the parties cannot agree.
- Check the breach and cancellation clause, including the remedy period.
- Understand the deposit, guarantee and any personal suretyship you are being asked to sign.
- Negotiate rights to assign or sublet if you may sell your business.
- Consider whether the lease should be notarially registered.
- Diarise key dates, including the renewal deadline and escalation dates.
How O’Reilly Law can help
We draft and review commercial leases for landlords and tenants, negotiate key terms such as renewal options, maintenance obligations and suretyships, and advise on CPA compliance and registration of long leases. When disputes arise, we act in eviction applications, rental claims, spoliation matters and lease cancellations.
Contact us to review your lease before you sign or renew.
Related reading: Spoliation orders: restoring possession taken without a court order · Cancelling a contract for breach or repudiation: getting it right
This article is general information and not legal advice. Correct as at October 2026.