Consider the following scenario: a commercial lease agreement between a landlord and a tenant expires on 31 January.  The tenant, however, continues to occupy the premises after 31 January. During this time, neither party communicates any intention to terminate or renew the lease. Rent continues to be paid and accepted without objection. On 28 February, the tenant gives notice that he will be moving out on 31 March. Is this proper notice by the tenant?

In such circumstances, the doctrine of tacit relocation may apply. This principle holds that if a tenant remains in possession of the property after the lease has expired and the landlord does not object, a new lease is presumed to come into existence on the same terms and conditions as the original lease—except for its duration, and notice period required for termination.

This was clearly articulated in the case of Pareto Ltd v Mythos Leather Manufacturing (Pty) Ltd 2000 (3) SA 999 (W), where the court in paragraph 12 emphasized that tacit relocation does not revive the original lease in its entirety but rather creates a new lease on similar terms, subject to termination on reasonable notice. What constitutes reasonable notice depends on the circumstances. Where rent is paid monthly, the courts have found that a month’s notice is reasonable.

Further support for this interpretation is found in JTR Gibson’s Mercantile and Company Law (8th edition, chapter 5, page 185), which explains that tacit relocation arises from the conduct of the parties and not from any express agreement.

The Namibian High Court addressed tacit relocation in Namibia Airports Company Ltd v Menzies Aviation Namibia (Pty) Ltd and Another [2022] NAHCMD 403, in which the court held that for tacit relocation to be established, the party asserting it must prove that both parties conducted themselves in a manner that unequivocally indicated an intention to continue the contractual relationship. 

Landlords and tenants should be aware that when a lease expires and the tenant remains in occupation without objection, a new lease may be implied through tacit relocation. However, this new lease is not identical to the original, and statutory protections such as those under the Rent Ordinance 13 of 1977 may not apply. It is therefore advisable for both parties to communicate clearly and document their intentions before and after a lease expires to avoid unintended legal consequences.