This item in the Schedule creates a suspensive condition. A suspensive condition is a provision in a contract that has to be met or fulfilled for the particular contract to be valid. Should a suspensive condition in the provisions of the agreement not be met, the agreement will automatically be unenforceable as if it was never concluded. Item 1.9 creates the opportunity for the landlord to elect whether the payment of the deposit will be deemed to be a suspensive condition.
In a case where the landlord selects “yes”, the lease agreement will only be valid once the deposit has been paid and so doing will create a suspensive condition. The implication of this will be, that should the tenant not pay the deposit, within the time allowed, the lease agreement will never come into being and the landlord can immediately, on the lapse of the time period, advertise and place a new tenant. The benefit of this provision would be that a landlord does not have to wait out any time period, before signing a new lease agreement with a new tenant, in a case where the original tenant does not pay the deposit within the allowed time.
In this case however, the landlord also loses the ability to claim any damages from the tenant in respect of the lease agreement due to non-payment of the deposit.
Should the landlord select “no” in this provision it will have the effect that should the tenant fail to pay the deposit within the allowed time, the landlord will have to place the tenant on terms in terms of clause 23 before he will be in a position to cancel the lease agreement and find a replacement tenant.
There are benefits and risks to both scenarios. This is an important provision in a lease agreement to take note of and ensure you select the applicable option for each individual lease.