Can I force my tenant to trade?

“I own a small shopping complex. A key tenant, who must give six 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 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.

March 11, 2019

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