By Salleha Muhammad / Candidate Attorney / Mooney Ford Attorneys 

An unsigned lease can create a false sense of freedom. A landlord may believe that the premises remain available, while a prospective tenant may believe that the deal is already done. Then a better offer arrives, negotiations break down or one party changes their mind. The question becomes whether a binding lease has already been concluded. In South Africa, the answer is not always found on the signature page.

Lease negotiations often take place through emails, conversations and agents, with the formal document expected to follow later. During that exchange, the parties may reach agreement before the document is signed. Equally, a signed document may amount only to an offer that still requires acceptance in a prescribed way. Understanding the distinction matters before either party pays a deposit, hands over the keys or decides to walk away.

No Signature Does Not Always Mean No Agreement

South African law does not generally require an ordinary lease to be in writing to be valid between the landlord and tenant. Section 1(1) of the Formalities in Respect of Leases of Land Act 18 of 1969 provides that a lease is not invalid merely because it is not in writing, subject to the Act’s provisions concerning certain long-term leases. For leases of residential dwellings, Sections 5(1) and 5(2) of the Rental Housing Act 50 of 1999 provide that a residential lease need not be in writing, but that a landlord must reduce the lease to writing if requested by the tenant. The Rental Housing Act concerns residential rental housing; its provisions should not be presented as governing commercial leases generally.

The absence of a signed document is therefore not conclusive. A verbal agreement, an exchange of emails and even WhatsApp messages, or the parties’ conduct may help establish whether a lease was concluded. The key question is whether the parties reached agreement on the essential terms of the lease, including identifying the property properly and the rental to be paid, and on any other terms that they treated as material to concluding the agreement. The significance of a particular term depends on the circumstances and the parties’ expressed intentions. Agreement on rental alone does not necessarily mean that a lease has been concluded if other material issues remain unresolved.

When Signing Later Means Different Things

The statement “we will sign the lease later” can reflect different intentions. The parties may already have reached a binding agreement and intend the written lease simply to record it. Alternatively, they may intend that neither party will be bound until a final document is signed, or until a specified acceptance procedure has been followed. The wording of the draft, the correspondence and the parties’ conduct must be considered in totality. The expectation that a formal document will follow does not necessarily, by itself, determine whether the parties are already bound.

A signed document can create a similar misunderstanding. An “offer to lease” may state that the tenant’s signature constitutes an offer and that the landlord must accept it in a particular manner. For example, the document may require signature by an authorised representative of the landlord and written communication of that acceptance to the tenant. Where the offer prescribes a method of acceptance, the parties should follow it. A tenant should not assume that signing an offer alone has secured the premises. The document and related correspondence must be read together to determine what was offered, how acceptance had to occur and whether that process was completed.

Changes To A Draft Can Mean Negotiations Are Still Open

Returning a draft with amendments may seem like the final stage of completing the paperwork. Legally, however, a response that says “I accept, provided these terms are changed” may amount to a counter-offer rather than acceptance of the original offer. A proposed change to an important term, such as an escalation clause or responsibility for repairs, will generally need to be accepted by the other party, or by someone authorised to act for them, before the parties can rely on the amended term as agreed.

Not every question or correction prevents an agreement from being concluded. Asking for clarification is different from insisting that a term be changed before accepting the offer. The substance of the response and the context matter. Parties should make clear whether they are accepting the proposed terms, seeking clarification or proposing changes. Otherwise, one party may believe that a deal is final while the other considers negotiations to be ongoing.

An Agent’s Authority And The Parties’ Conduct Matter

An agent’s involvement adds another layer to the negotiations. Authority to advertise premises or to assist in processing an application does not necessarily include or even infer authority to conclude a lease or agree to changes. However, the question is not resolved solely by looking at the landlord’s private instructions to the agent. A principal’s words or conduct may create an appearance that the agent has authority to act. Whether an agent can bind the landlord will depend on the facts and the applicable principles of agency and estoppel. Landlords should clearly communicate limits on an agent’s authority, and tenants should confirm who is authorised to approve terms and accept offers on behalf of the landlord.

The parties’ conduct may also be relevant. Allowing occupation, handing over keys, requesting rent or accepting payment may support an argument that the parties regarded a lease as having been concluded. Those actions are not automatically decisive: they must be considered with the correspondence, proposed terms and any agreed requirement for signature or another step before the parties would be bound. A party should be cautious about treating a transaction as operational while assuming that an unsigned document necessarily leaves them free to withdraw.

Deposits And Suretyships Are Separate Questions

An unpaid deposit does not automatically establish that no lease exists. Depending on the terms agreed, the obligation to pay a deposit may arise under a lease that is already binding. That is different from an agreement which clearly provides that the lease will only become binding once the deposit is paid or another specified requirement is met. The wording and context of the agreement are important; neither payment nor non-payment should be treated as conclusive without considering them.

A suretyship must be considered separately. A suretyship is an agreement under which a person undertakes liability for another party’s debt or obligations, subject to its terms. Section 6 of the General Law Amendment Act 50 of 1956 requires the terms of a suretyship to be embodied in a written document signed by or on behalf of the surety. An unsigned suretyship will not satisfy that statutory formality. That does not, by itself, invalidate a separate lease between the landlord and tenant. The position may differ if the parties expressly made the existence of a valid suretyship a requirement before the lease would become binding or operative.

Be Clear About When Commitment Begins

The best time to decide when a lease becomes binding is before negotiations become complicated. The draft and related correspondence should state whether the parties intend to be bound on acceptance, only once the final lease is signed, or only after specified requirements have been met. Parties should confirm who may accept changes and ensure that everyone is working from the same final version. Deposits and access to the premises should be dealt with consistently within the agreed process.

Before walking away from negotiations or accepting another tenant, consider the full exchange rather than the signature page alone. A document labelled “draft” may sit alongside correspondence recording acceptance or conduct that supports the existence of an agreement. Whether a lease has been concluded will always depend on the wording, the circumstances and the parties’ conduct. Clear drafting and a documented acceptance process can reduce uncertainty and help prevent avoidable disputes.

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