While 2023 was the worst year of load-shedding ever experienced in South Africa the forecast for 2024 is even worse.
A consequence is that questions have arisen regarding the responsibilities of a landlord during load-shedding and we have had several queries from desperate tenants and landlords trying to ascertain their respective rights and responsibilities.
There is no legal obligation on a landlord to provide for generators, inverters, or to have solar panels installed at its building unless specifically agreed upon. Landlords may, however, consider doing so to add value to the property and to attract tenants.
The benefits of alternative energy solutions are diverse and include contributing to environmental sustainability while enjoying cost savings, potential lower maintenance charges and mitigating the impact of future energy price volatility. The cost of installing alternative energy solutions is however not always affordable.
The following scenarios may apply:
A generator, inverter, or solar panels are already installed at the building:
The lease agreement between the landlord and tenant should stipulate who will be responsible for the costs associated with the use of the alternative power solution (including, but not limited to, the cost of maintenance, fuel and insurance). The parties may have an all-expenses-included lease agreement and in which instance there will be no additional obligation on the tenant to pay for the use of a generator, inverter, or solar panels. An addendum to an existing lease may be required should the parties come to a different arrangement during the currency of the lease.
In the recent 2017 case of Bodies Under Construction CC and Others v Permasolve Investments (Pty) Ltd the court found that an all-inclusive lease agreement with no provision for additional payments for generator use was valid. It was held that disconnecting the business from the building’s generator, which it had used for more than 10 years, had been unlawful and amounted to spoliation. Permasolve tried to argue that the disconnection was because of the business not paying an additional amount for the use of the generator. Since there was never such agreement for additional payments, the business had the right to be connected to and make use of the generator as alternative energy source during load-shedding. This case reiterated the importance of making adequate provision in a lease agreement as to who will be responsible for bearing the running costs of alternative power supply during load-shedding.
No alternative power solutions installed at the building:
A tenant may request from its landlord to have an alternative power solution installed at its building, but a landlord is not obliged to give effect to such request. Should the landlord not be willing to do so then the tenant might have an alternative power solution installed at its own cost and subject to the necessary consent form the landlord.
Depending on the choice of alternative power solution, special consent from the landlord may be required should the solution necessitate structural changes to the property or integration into the existing electrical system serving the property. In sectional title complexes, especially, the locality of the equipment may also require Body Corporate consent.
An agreement with the landlord would be necessary to regulate ownership of the installed goods and the removal thereof on termination of its lease agreement. If such an agreement is not entered into before the tenant effects installation, the installed goods may be deemed to be a fixture to the property and could become the property of the landlord in terms of the initial lease clauses upon termination of the lease. The agreement can be in the form of an addendum to the existing lease agreement and should also address topics such as insurance considerations in respect of the alternative solution, installation cost, maintenance cost as well as the cost of acquiring the necessary electrical compliance certificate (if applicable) for the installation and/or after removal of the solution from the property.
As with most things in law, the crux of this matter is that everything should be recorded in writing, either by way of an all-inclusive lease agreement or an addendum attached to the lease agreement. Do not hesitate to contact our commercial department (Zane Meyer or Erika Oosthuizen) for assistance in drafting or negotiating your leases.
This Article written by Faure & Faure Inc lawyer & conveyancer Erika Oosthuizen and candidate attorney Chrisli Hamman.
For more information, contact 021 871 1200 or email firstname.lastname@example.org.
Faure & Faure Inc. – Your partner in Law in the Paarl and Boland Area.