Author: Nicholas De Decker – Candidate Attorney
*Supervised by: Penny Chenery – Director & Head of Real Estate
30 August 2002 saw the commencement of the Electronic Communications and Transactions Act 25 of 2002 (ECTA or the Act), a piece of legislation aimed at facilitating and governing the fast-emerging fields of e-commerce and digital correspondence
Due to the diverse and ever-changing nature of technology, ECTA’s scope is broad and all-encompassing, with section 4 of Chapter 1 detailing the Act’s scope of application. Clause (1) of this section outlines that the Act applies to “any electronic transaction or data message”.
However, ECTA’s sphere of application is not limitless, as provision 4(4) sets out that “This act must not be construed as giving validity to any transaction mentioned in Schedule 2”. Schedule 2, which is found on the last page of the Act, outlines the four different transactions that provision 4(4) is referring to.
Of the different transactions, point 2 refers to long-term leases, stating that
“An agreement for the long-term lease of immovable property in excess of 20 years as provided for in the Alienation of Land Act, 1981 (Act No. 68 of 1981)”.
This clause is problematic in more than one way. Firstly, the Alienation of Land Act deals with the sale of immovable property and makes no mention of lease agreements. The correct piece of legislation in this regard is the Formalities in Respect of Leases of Land Act 18 of 1969. To compound the error, the time period stipulated for long-term leases is 10-99 years.
In the context of this article, it is important to understand how a long-term lease differs from a standard lease agreement, and why the correct time period is so important.
Long-term leases are a type of limited real right that have to be notarially registered against the title deed of the property. This is crucial, because only once this has happened, the lease agreement will be valid and binding against all potential creditors and any successors in title.
Accordingly, knowing when such registration is required is of vital importance to lessees to ensure that they are protected. Given the importance of legislation as primary source of law, it is concerning that a flaw like the one found in Schedule 2 of ECTA has not been rectified, especially considering that it came into effect nearly 20 years ago. In addition, ECTA has been amended on two separate occasions, by both the Consumer Protection Act 68 of 2008 and the Cybercrimes Act 19 of 2020. However, neither of these amendments deal with the erroneous information provided in Schedule 2.
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