In Lesotho, sublease agreements are crucial for regulating the temporary use and enjoyment of property between a Sublessor (Landlord) and a Sublessee (Tenant). However, many people are unaware that long-term sublease agreements—those lasting at least three years—must be registered with the Deeds Registry to be valid and enforceable. Below, we explore the legal basis for this requirement, recent court rulings that emphasize its importance, and how registration can benefit parties seeking mortgage bond facilities.
- What Is a Sublease Agreement?
A sublease agreement is a contract where the Sublessor grants the Sublessee the temporary right to use the property in exchange for rent. The Deeds Registry Act 12 of 1967 provides guidelines on how such agreements must be drafted, registered, and enforced.
- Legal Framework Under Section 24 of the Deeds Registry Act
2.1 Section 24(1) – Registration Requirement
According to Section 24(1) of the Deeds Registry Act, every lease or sublease meeting one of the following conditions must be registered:
- The term is not less than three years
- The sublease is renewable and can total at least three years
- The sublease is for the natural life of the lessee or any other named person
2.2 Section 24(2) – Consent and Timeline
Before registration, the Commissioner of Lands must grant Consent. Once Consent is obtained, the parties have three months to lodge the agreement with the Deeds Registry.
2.3 Section 24(6) – Consequences of Non-Compliance
Failure to comply renders the sublease agreement “null and void and of no force or effect.” This clause underscores the necessity of proper registration for legal validity.
- Court of Appeal Ruling: Molomo Filing Station vs Mendi Group
In the consolidated judgment of Molomo Filing Station (Pty) Ltd & Another vs Mendi Group (Pty) Ltd C of A (CIV) 83/2019, the Court of Appeal invalidated a 12-year sublease that had not been registered. The court upheld Section 24(1), affirming that lack of registration effectively negates any enforceability of long-term subleases.
- Advantages of a Registered Sublease
4.1 Validity and Enforceability
- Compliance with the Deeds Registry Act ensures the sublease is legally recognized.
- Disputes can be resolved more effectively when the agreement is officially recorded.
4.2 Security for Mortgage Bond Facilities
- A registered sublease is considered immovable property under the Deeds Registry Act.
- Section 36(a) indicates that a sublease can be hypothecated by means of a mortgage bond.
- This option is especially beneficial for commercial or development sublease agreements, where financing may be sought to develop the property.
- Using the Sublease as Security
Registering a sublease opens the door for financial institutions to treat the agreement as collateral. In cases where the Sublessee must raise funds for property development or other business ventures, the mortgage bond over a registered sublease offers a secure form of credit assurance.
- Conclusion
Registering a long-term sublease agreement under the Deeds Registry Act 12 of 1967 is not just a legal formality—it guarantees validity, enforceability, and allows the sublease to serve as security for mortgage financing. As reinforced by the Court of Appeal in Molomo Filing Station vs Mendi Group, failure to comply renders a sublease agreement null and void. If you are entering into a sublease of three years or more, make sure to follow the registration processthoroughly:
- Obtain Consent from the Commissioner of Lands.
- Submit the sublease to the Deeds Registry within three months.
- Ensure your agreement is properly lodged to secure legal and financial benefits.
By adhering to these steps, both Sublessor and Sublessee can enjoy a more stable and financially secure arrangement in Lesotho.
Disclaimer: This article is intended for general informational purposes and does not constitute legal advice. For assistance regarding registration or validity of sublease agreements, consult a qualified attorney or contact the Commissioner of Lands in Lesotho.