{"id":722,"date":"2016-02-11T09:22:36","date_gmt":"2016-02-11T07:22:36","guid":{"rendered":"http:\/\/anthonywhatmore.co.za\/?p=722"},"modified":"2016-05-19T10:05:39","modified_gmt":"2016-05-19T08:05:39","slug":"landlords-managing-your-tenants-liquidation","status":"publish","type":"post","link":"https:\/\/anthonywhatmore.co.za\/index.php\/2016\/02\/11\/landlords-managing-your-tenants-liquidation\/","title":{"rendered":"LANDLORDS: MANAGING YOUR TENANT\u2019S LIQUIDATION"},"content":{"rendered":"<p><a href=\"http:\/\/anthonywhatmore.co.za\/wp-content\/uploads\/2016\/02\/tear-up-contract-300x200.jpg\" rel=\"attachment wp-att-723\"><img decoding=\"async\" loading=\"lazy\" class=\"alignnone size-full wp-image-723\" src=\"http:\/\/anthonywhatmore.co.za\/wp-content\/uploads\/2016\/02\/tear-up-contract-300x200.jpg\" alt=\"tear-up-contract-300x200\" width=\"300\" height=\"200\" srcset=\"https:\/\/anthonywhatmore.co.za\/wp-content\/uploads\/2016\/02\/tear-up-contract-300x200.jpg 300w, https:\/\/anthonywhatmore.co.za\/wp-content\/uploads\/2016\/02\/tear-up-contract-300x200-272x182.jpg 272w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p style=\"text-align: justify;\">In these hard times, you may well be faced with a situation where your tenant is liquidated (\u201csequestrated\u201d in the case of an individual or trust, \u201cliquidated\u201d or \u201cwound up\u201d in the case of a company). \u00a0If that happens, what are your rights and how do you manage them? A recent Supreme Court of Appeal decision illustrates the principles involved.<\/p>\n<p style=\"text-align: justify;\"><strong><em>The landlord, the lease and the sub-lease \u00a0<\/em><\/strong><\/p>\n<ul style=\"text-align: justify;\">\n<li>A tenant had installed a sub-tenant in a portion of leased business premises,<\/li>\n<li>Stressed financially, the tenant breached its lease by failing to pay its rental on time,<\/li>\n<li>On 16 January the landlord gave notice to the tenant to remedy the breach within 7 days or face cancellation of the lease,<\/li>\n<li>Although the tenant was finally liquidated only on 27 February, the <u>effective<\/u> date of a company\u2019s liquidation is always retroactively backdated to a \u201cdeemed\u201d date of liquidation. \u00a0That \u201cdeemed\u201d date is the date the application for liquidation is lodged with the Court, and in this case it was 21 January \u2013 therefore the landlord\u2019s 7 day notice period had <u>not<\/u> expired at the effective date of liquidation,<\/li>\n<li>On 27 January (i.e. 6 days after effective date of liquidation), the landlord delivered to the tenant a letter cancelling the agreement,<\/li>\n<li>The liquidator of the tenant then tried to enforce the lease against the sub-tenant, arguing that the lease remained in force because the purported cancellation was only made after date of liquidation and was therefore invalid.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong><em>The liquidator and the law<\/em><\/strong><\/p>\n<ul style=\"text-align: justify;\">\n<li>At date of liquidation the \u201chand of the law\u201d is laid upon the estate of the insolvent or company and the rights of all parties are \u201cfrozen\u201d,<\/li>\n<li>In regard to leases, the liquidator of a liquidated tenant has the right to make an election \u2013 either continue with the lease or cancel it and leave the landlord with a concurrent claim for damages,<\/li>\n<li>Should the liquidator elect to continue with the lease, he\/she \u201csteps into the shoes\u201d of the tenant, and has no greater rights in terms of the lease than the tenant had,<\/li>\n<li>The result &#8211; all rental for the post-liquidation period is payable by the liquidator to the landlord as a cost of liquidation, and \u2013 crucially in this case \u2013 \u201cthe terms of the lease remain in place and the liquidator must comply with it\u201d. \u00a0The liquidator is \u201cobliged to perform whatever is required of the insolvent in terms of the contract, including unfulfilled past obligations of the insolvent\u201d,<\/li>\n<li>Thus, held the Court, \u201cThe issue is simply whether there was an effective and enforceable right at the critical time \u2013 the time of the cancellation\u201d. \u00a0In this case, the landlord had a clear, enforceable right to cancel the lease when it did, and the cancellation was accordingly valid against the liquidator.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong>Landlords: <\/strong>\u00a0Taking timeous action to protect your rights in the event of any default by your tenant is critical. \u00a0Note that any provision in your lease for it to be terminated automatically on liquidation is void. Take advice &#8211; at the first sign of financial stress in your tenant &#8211; on how to best protect your rights. <strong>Sub-tenants: <\/strong>\u00a0Your rights are subject to those of the main tenant, so if the landlord cancels the main lease, your sub-lease ends as well. \u00a0Again, take advice on protecting your rights if the tenant shows any signs of financial stress.<\/p>\n<p style=\"text-align: right;\">Source: LawDotnews July 2014<\/p>\n<p><\/p>","protected":false},"excerpt":{"rendered":"<p>In these hard times, you may well be faced with a situation where your tenant is liquidated (\u201csequestrated\u201d in the case of an individual or trust, \u201cliquidated\u201d or \u201cwound up\u201d in the case of a company). \u00a0If that happens, what<\/p>\n","protected":false},"author":1,"featured_media":723,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[33],"_links":{"self":[{"href":"https:\/\/anthonywhatmore.co.za\/index.php\/wp-json\/wp\/v2\/posts\/722"}],"collection":[{"href":"https:\/\/anthonywhatmore.co.za\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/anthonywhatmore.co.za\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/anthonywhatmore.co.za\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/anthonywhatmore.co.za\/index.php\/wp-json\/wp\/v2\/comments?post=722"}],"version-history":[{"count":3,"href":"https:\/\/anthonywhatmore.co.za\/index.php\/wp-json\/wp\/v2\/posts\/722\/revisions"}],"predecessor-version":[{"id":726,"href":"https:\/\/anthonywhatmore.co.za\/index.php\/wp-json\/wp\/v2\/posts\/722\/revisions\/726"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/anthonywhatmore.co.za\/index.php\/wp-json\/wp\/v2\/media\/723"}],"wp:attachment":[{"href":"https:\/\/anthonywhatmore.co.za\/index.php\/wp-json\/wp\/v2\/media?parent=722"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/anthonywhatmore.co.za\/index.php\/wp-json\/wp\/v2\/categories?post=722"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/anthonywhatmore.co.za\/index.php\/wp-json\/wp\/v2\/tags?post=722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}