Page 32 - Q&A 2019/2020

Can I force my tenant to trade?

Venessa Vorster
February 2019

“I own a small shopping complex. A key tenant, who must give 6 months’ notice
if they don’t renew their lease, has just given notice. I don’t have a problem
with that, but with months to go before they exit, they have now stopped
trading. This will have a big impact on feet to the complex if they don’t trade
and I’ve asked them to continue trading until they vacate the premises, but the
client refuses and says he’s cutting his losses. Can I force him to trade for the Commercial
remainder of the lease agreement?”

Whether you can force the tenant to continue trading all depends on the terms
of your lease agreement.

In the case of Edcon Limited v Bay West City (Pty) Ltd, a landlord sought to force
the lessee to continue trading after the latter gave notice that it would close its
shop due to financial reasons. The lessee did however, continue to pay rent and
maintain the premises. The landlord argued that, in order to attract customers
and remain competitive in the market, tenants could not be allowed to simply
close their doors whilst paying rent and are thus required to trade. The court
however disagreed and held that, as long as the tenant honoured the lease,
the landlord could not insist that the tenant continue trading where a term in
the lease requiring the lessee to do so, did not exist. It further held that, should
the lessee be obliged to carry on business for the full duration of the lease, even
when suffering a loss, such onerous terms must be stipulated in the lease either
expressly or by implication.
Accordingly, unless there is a clear provision in your lease agreement that
obliges the tenant to keep trading at full capacity for the remainder of the lease,
you will not be able to force your tenant to continue trading. However, should
there be such a provision you may be able to force your tenant to honour the
agreement and continue trading.

It is accordingly advisable that you consult with your attorney regarding the
lease agreement and to what extent it provides for the obligation to trade
or continue trading during the period of notice. It may also be worthwhile to
review all your other lease agreements to determine if the aspect of trading is
adequately dealt with in your leases.

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