Monthly Archives: October 2018

What is voluntary sequestration?

The term “insolvency” relates to both sequestration (for individuals and trusts) and liquidation (for companies and close corporations). Sequestration can either be effected by voluntary sequestration or compulsory sequestration. This article will deal with voluntary sequestration, where the person applying to the Court for sequestration is the insolvent individual himself/herself.

What does “insolvent” mean?

If someone is insolvent (bankrupt), the amount of her debts is more than the value of their assets and income, and she is unable to pay her creditors (a creditor is a person or business she owes money to).

How does voluntary sequestration work?

When a person becomes insolvent, she can apply to the Court for her estate to be sequestrated. There are, however, three requirements that she will have to meet before the Court will allow her estate to be sequestrated:

  1. She must prove that her debts are actually more than the value of her assets.
  2. She must have enough assets to pay the costs of the sequestration application.
  3. She must prove that the sequestration will benefit the persons and/or businesses she owes money to i.e. they must get paid (at least something) if her estate is sequestrated.

If the Court grants permission for sequestration, it will appoint a trustee/curator by court order who must manage the insolvent estate to the equal benefit of all the creditors.

The trustee/curator will sell her assets and use the money to pay her creditors. If the money from the sale of her assets is not enough to pay all creditors in full, the money will be divided pro rata between the creditors based on the amount owed to each creditor and the order of preference of payment. Any outstanding debt that remains thereafter will be written off by the creditors.

What happens when the voluntary sequestration process has been completed?

The insolvent person can start over with no debt to his name. This makes it sound as if a person can make debt, then apply for voluntary sequestration and walk away without paying his creditors. However, being sequestrated does have disadvantages.

What are the disadvantages of voluntary sequestration?

The following disadvantages should be considered before applying for a voluntary sequestration:

  1. The sequestrated person’s credit record will get a blow as he/she will be blacklisted at credit bureaus and lose their creditworthy status.
  2. The sequestrated person can’t borrow money or incur any other debt until he/she is rehabilitated.

The sequestrated person will qualify as being rehabilitated when declared as such by the Court, which can happen four years after the sequestration date or sometimes sooner. If the Court does not declare the sequestrated person rehabilitated, he/she will automatically become rehabilitated ten years after his/her sequestration date.

  1. If a person’s estate is sequestrated, it may lead to prohibition of membership of certain professional bodies until he/she is rehabilitated, or even future exclusion from certain professions.

Who may apply for voluntary sequestration?

  1. In the case of a natural person becoming insolvent, the person himself/herself may apply, or his/her representative.
  2. Where spouses are married in community of property, both spouses must apply for voluntary sequestration at the same time.
  3. The partners in a partnership who are resident in South Africa or their representative may apply for voluntary sequestration.
  4. When a deceased estate is insolvent, the executor of the estate may lodge an application for voluntary sequestration.
  5. The curator (curator bonis) of an estate where the individual is unable to handle his/her own affairs e.g. if the individual is mentally unfit.
  6. An insolvent trust.

Voluntary sequestration is not the panacea it appears to be at the surface. Although it might be a solution for the financial problems of an insolvent person, there is a price to pay in terms of losing a creditworthy status and/or a profession together with a good reputation which might have taken years to build up.

The decision to apply for voluntary sequestration should not be taken lightly and should only be used as a last resort after all other possible avenues have been exhausted. If you need more information on insolvency and voluntary sequestration, please contact your legal advisor.

References:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

Korporatiewe Beheer – Die Veilige Bewaring van Rekords

Die woord “rekords” word in Artikel 1 van die Maatskappywet No 71 van 2008 (“die Wet”), omskryf as enige inligting wat in Artikel 24 van die Wet beoog word. Artikel 24 van die Wet omskryf verskeie rekords wat deur ’n maatskappy gehou moet word, insluitend afskrifte van die maatskappy se Memorandum van Inkorporasie (“MOI”) asook die maatskappy se rekeningkundige rekords.

Daar word ingevolge Artikel 24 van die Wet vereis dat die volgende maatskappy rekords op rekord gehou moet word:

  • ’n kopie van die MOI;
  • enige wysiging aan die MOI;
  • ’n afskrif van enige reëls deur die direksie gemaak;
  • ’n rekord van ’n maatskappy se direkteure;
  • afskrifte van alle verslae wat by ’n algemene jaarvergadering voorgelê word;
  • afskrifte van alle finansiële jaarstate;
  • rekenkundige rekords soos deur die Wet vereis;
  • kennisgewings en notules van alle aandeelhouersvergaderings;
  • alle besluite wat deur die aandeelhouers aangeneem is;
  • enige dokument wat met betrekking tot aandeelhouersbesluite aan aandeelhouers beskikbaar gestel is;
  • afskrifte van enige skriftelike kommunikasie wat aan enige klas aandeelhouer gestuur is;
  • notules van alle direksievergaderings en -besluite;
  • notules van direksiekomiteevergaderings, met inbegrip van die ouditkomitee; en
  • ’n sekuriteite-register vir elke maatskappy met winsoogmerk.

Daar word van alle maatskappye vereis om ’n geregistreerde kantoor in Suid-Afrika te hê en die rekords wat hulle ingevolge Artikel 24 van die Wet in stand moet hou, moet gehou word by daardie kantoor of ’n ander ligging waarvan die Companies and Intellectual Property Commission (“CIPC”) in kennis gestel moet word. Artikel 28(2) van die Wet bepaal dat ’n maatskappy se ander rekords, insluitend rekeningkundige rekords, gehou moet word, of toeganklik moet wees by die maatskappy se geregistreerde kantoor. ’n Maatskappy moet aanvanklik in sy MOI besonderhede van die ligging van sy geregistreerde kantoor verskaf en enige verandering daarna moet by wyse van kennisgewing aan die Kommissie gelewer word.

Alle maatskappy-rekords moet bewaar word in skriftelike, elektroniese of ’n ander formaat, wat dit moontlik maak om die inligting binne ’n redelike tyd in skriftelike formaat weer te gee.

Soms is ’n maatskappy se geregistreerde kantoor en sake-adres nie dieselfde nie – Artikel 23(3) van die Wet bepaal dat ’n maatskappy se geregistreerde adres die adres van die ligging van die maatskappy se kantoor of dan eerder die ligging van die maatskappy se hoofkantoor moet wees.

Die regulasies wat deur die Minister uitgevaardig is, skryf die termyn waarvoor maatskappy-rekords in stand gehou moet word, voor. Waar verskillende wetgewing verwys na die bewaring en gebruik van rekords, moet maatskappye aan die strengste van die wetgewende vereistes voldoen. Byvoorbeeld, die Wet op Belasting of Toegevoegde Waarde No 89 van 1991 stipuleer dat fakture gehou moet word vir vyf jaar vanaf die datum wat die opgawe ingedien is, maar die Wet sal vereis dat finansiële rekords vir ’n minimum van sewe jaar gehou word en daarom moet die maatskappy voldoen aan die strengste voorskrif van sewe jaar.

Waar wetgewing verwys na verskillende rekords (byvoorbeeld indiensneming-rekords teenoor rekenkundige rekords), dan is die vereistes spesifiek tot daardie wetgewing en moet aangewend word ooreenkomstig die betrokke rekords. Dit is belangrik om daarop te let dat die Wet ’n algemene vereiste ten opsigte van enige rekords en inligting het, wat ’n maatskappy vereis word om te hou in terme van die Wet of enige ander wetgewing, naamlik om hierdie inligting en rekords vir ’n periode van minstens sewe jaar (of die langer periode voorgeskryf deur die betrokke wetgewing) te bewaar.

In sekere omstandighede vereis wetgewing dat rekords bewaar moet word vir ’n onbepaalde tydperk. Die term “onbepaald” word nie gedefinieer in wetgewing nie, maar stipuleer duidelik dat rekords bewaar word vir solank as wat die betrokke entiteit bestaan. Sodra die entiteit nie meer bestaan nie, verval die “onbepaalde” tydperk ook. In die geval van ’n maatskappy, bestaan die verpligting slegs ten opsigte van ’n entiteit wat geregistreer is en bly by CIPC. Sodra ’n entiteit gederegistreer is, kan ander wetgewing vereis dat rekords gehou word, maar slegs vir ’n spesifieke periode en nie “onbepaald” nie. In die geval van likwidasie en sekwestrasie in terme van die Wet op Insolvensie No 24 van 1936, is daar spesifieke vereistes wat betrekking het tot die veilige bewaring van rekords. Omdat ’n gederegistreerde maatskappy gerestoreer kan word, of litigasie kan geskied in terme van ’n gederegistreerde maatskappy, is dit belangrik dat ’n gederegistreerde maatskappy se dokumentasie bewaar word vir ’n redelike tydperk van ten minste drie jaar na deregistrasie.

Hierdie is ‘n algemene inligtingstuk en moet gevolglik nie as regs- of ander professionele advies benut word nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of enige skade of verlies wat volg uit die gebruik van enige inligting hierin vervat nie. Kontak altyd u regsadviseur vir spesifieke en toegepaste advies. (E&OE)

Korporatiewe Beheer – ’n Trust as ’n Lid van ’n Beslote Korporasie

Die Wet op Beslote Korporasies No 69 van 1984 (“die Wet”) het voorsiening gemaak vir die oprigting van beslote korporasies wat eenvoudige, gedereguleerde en buigsame entiteite met beperkte aanspreeklikheid is wat veral vir klein ondernemings geskik is. Hulle het eie regspersoonlikheid en geniet die voordele van ewigdurende opvolging.

Die Maatskappywet No 71 van 2008, verbied egter die registrasie van enige nuwe beslote korporasies na 1 Mei 2011. Beslote korporasies kan omgeskakel word na maatskappye, maar maatskappye kan nie meer omgeskakel word na beslote korporasies nie. Reeds bestaande beslote korporasies word egter geadministreer deur die Wet.

’n Beslote korporasie het nie aandeelhouers nie, maar wel lede en aangesien ’n beslote korporasie afsonderlike regspersoonlikheid het, staan dit onafhanklik en verwyderd van sy lede. ’n Beslote korporasie kan uit ’n minimum van een lid tot ’n maksimum van tien lede bestaan. Die beperking op die aantal lede beklemtoon die wetgewer se bedoeling dat die beslote korporasie bedoel was vir kleiner ondernemings, waar die verhouding tussen die lede soortgelyk aan dié van vennote is.

Die Wet stipuleer in Artikel 29 dat slegs natuurlike persone lede mag wees van ’n beslote korporasie. Verder beklemtoon hierdie artikel dat ’n natuurlike of regspersoon in sy of haar kapasiteit as ’n trustee van ’n inter vivos trust ’n lid van ’n beslote korporasie kan wees as daar aan sekere vereistes voldoen word, naamlik:

  • Geen regspersoon mag direk of indirek ’n begunstigde wees van daardie trust nie;
  • Die lid sal dieselfde regsverpligtinge hê tussen homself of haarself en die beslote korporasie as wat ’n natuurlike persoon sou hê;
  • Die beslote korporasie is nie verplig, of het geen verpligting om enige ooreenkoms tussen die trust en die betrokke lid van die korporasie te onderhou of na te kom nie;
  • Indien die aantal natuurlike persone wat geregtig is om enige voordeel van die trust te ontvang, ter enige tyd wanneer hulle by die beslote korporasie gevoeg word, aanleiding gee daartoe dat die aantal lede van die korporasie meer as 10 word, sal die bepalings en voorwaardes waarvoor voorsiening gemaak word in hierdie artikel nie meer langer van toepassing wees nie

Gevolglik sal die volgende persone gemagtig wees om as lede van ’n beslote korporasie te dien:

  1. ’n Natuurlike persoon
  2. ’n Natuurlike of regspersoon in sy of haar hoedanigheid as ’n trustee van ’n testamentêre of inter vivos trust wat as verteenwoordiger van daardie trust optree, behalwe indien:
  • Die persoon ’n begunstigde van die trust is;
  • Die trustee ’n regspersoon is, en direk of indirek beheer word deur enige van die begunstigdes van die trust; en
  • ’n Natuurlike of regspersoon in sy of haar verteenwoordigende kapasiteit, insolvent, oorlede, verstandelik gestremd of andersins onbevoegd is om sy of haar eie sake te bestuur, ’n trustee van sy of haar eie boedel is of ’n administrateur, eksekuteur of kurator van sodanige boedel is.

Onderworpe aan die uitsonderings soos hierbo gestipuleer, mag slegs natuurlike persone lede van ’n beslote korporasie wees en mag geen regspersoon ’n ledebelang in ’n beslote korporasie hou nie. ’n Maatskappy of beslote korporasie kan dus nie ’n lid van ’n beslote korporasie wees nie en enige oortreding van hierdie verbod kan tot gevolg hê dat die regspersoon aanspreeklik sal wees vir sekere skulde van die beslote korporasie. ’n Beslote korporasie mag wel ’n lid van ’n maatskappy of vennootskap wees en ’n beslote korporasie kan selfs die beherende aandeelhouer van ’n maatskappy word.

Hierdie is ‘n algemene inligtingstuk en moet gevolglik nie as regs- of ander professionele advies benut word nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of enige skade of verlies wat volg uit die gebruik van enige inligting hierin vervat nie. Kontak altyd u regsadviseur vir spesifieke en toegepaste advies. (E&OE)

Registration of a trust as a taxpayer

The frustration experienced by taxpayers and the complexity of registering a trust as a taxpayer with the South African Revenue Service (SARS), has been widely publicised in recent years. Despite calls from industry bodies for a simplified approach (like companies and individuals), registering a trust as a taxpayer remains an overly complex process.

The inconsistency of information received by taxpayers between the SARS website and different branch offices is one of the areas of major concern. SARS’ website, for example, indicates that either certified or uncertified copies of identity documents are acceptable, whereas branch officers only accept certified copies. Another frustration is requirements that are seemingly not in line with legislation. As an example, SARS requires the appointment, by resolution, of a so-called “main trustee”, whereas the concept of a “main trustee” does not exist in the Trust Property Control Act 57 of 1998. The same act requires that a separate bank account must be used for deposits received by persons in their capacity as trustees of a trust, but SARS seemingly requires some trusts to have bank accounts while not imposing this requirement on others during registration.

Based on recent interactions with SARS, the following guidelines should assist taxpayers in registering trusts as a taxpayer. Although many of the requirements do not seem to agree with what is required by legislation (or sometimes common sense), a call on such formal matters at a branch office will not assist taxpayers and they should rather ensure that the documents below are at hand. All the documents indicated below must be in a certified form:

  • A completed IT77TR form (available on the SARS website);
  • A resolution appointing one of the trustees a “main trustee”. Even if this is indicated in a trust deed, it must be specifically resolved. It is suggested that it is this “main trustee” that represents the trust at the SARS branch office;
  • A resolution authorising the said “main trustee” to sign all documents on behalf of the trust for purposes of registering it as a taxpayer with SARS;
  • Identify documents of all trustees (if you use the new smartcard ID document, ensure that both the front and the back are copied). Note that the trustee doing the registration, must also have their original identity document at the branch;
  • Proof of address for all trustees (ensure that this address on the proof agrees to what is completed on the IT77TR form);
  • Proof of address of the trust. For these purposes, use the CRA01 available on the SARS website to accompany the proof of address. It is suggested that two versions of the CRA01 are completed. One by the “main trustee” and one by a different trustee, since different branch offices require different trustees to complete the form;
  • Proof of banking details. If the bank account is less than one month old, then a letter from the bank confirming that the details are in order. In all other cases, a bank statement is required;
  • The trust deed; and
  • The letter of authority from the Master’s Office.

For good measure it is suggested, if possible, to take all original documents along to the branch as well (only present these if required and ensure it is returned). Also, ensure that a proof of registration and the taxpayer reference number of the trust is obtained after successful registration.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

Co-owning property with someone else: The ups and downs

What is co-ownership?

Co-ownership is when one or more people jointly own the same property. In essence, it is when they legally share ownership without dividing the property into physical portions for their exclusive use. It is thus commonly referred to as co-ownership in undivided shares.

It is possible to agree that owners acquire the property in different shares; for instance, one person owns 70 percent and the other 30 percent of the single property. The different shares can be recorded and registered in the title deeds by the Deeds Office.

The benefits

On paper, it’s a great idea. For starters, the bond repayments and costs of maintaining the home are halved. However, there can be problems and although not every friendship or relationship is destined to disintegrate, there does often come a time when one of the parties involved wants to sell up and move on to bigger and better things.

The risks

If ownership is given to one or more purchasers, without stipulating in what shares they acquire the property, it is legally presumed that they acquired the property in equal shares.

The risks, the benefits and the obligations that flow from the property are shared in proportion to each person’s share of ownership in the property. For instance, one of the co-owners fails to contribute his share of the finances as initially agreed, resulting in creditors such as the bank or Body Corporate taking action to recover the shortfall.

Having an agreement

If two people own property together in undivided shares it is advisable to enter into an agreement which will regulate their rights and obligations if they should decide to go their own separate ways.

The practical difficulties that flow from the rights and duties of co-ownership are captured by the expression communio est mater rixarum or “co-ownership is the mother of disputes”. It is therefore important that, when the agreement the co-owners entered into does not help them solve disputes, certain remedies are available to them.

The agreement should address the following issues:

  1. In what proportion will the property be shared?
  2. Who has the sole right to occupy the property?
  3. Who will contribute what initial payments to acquire the property.
  4. Who will contribute what amounts to the ongoing future costs and finances.
  5. How the profits or losses will be split, should the property or a share be sold?
  6. The sale of one party’s share must be restricted or regulated.
  7. The right to draw funds out of the access bond must be regulated.
  8. A breakdown of the relationship between the parties.
  9. Death or incapacity of one of the parties.
  10. Dispute resolution options before issuing summons.
  11. Termination of the agreement.

References:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

What is a Title Deed?

If you are planning to buy a new property, you will need to get the title deed transferred into your name to prove that you are the owner of the property. You will need the assistance of a lawyer specialising in property transfers (also known as a conveyancer) to help you transfer the title deed into your name.

You will only become the owner of the property when the Registrar of Deeds signs the transfer. After it has been signed, a copy of the title deed is kept at the Deeds Office closest to you.

A Title Deed is documentary proof of ownership in terms of the Deeds Registries Act 47 of 1937. Each property has its own separate Title Deed. It is an important document containing all the details pertaining to a particular property.

These details are:

  • The name of the existing owner as well as the previous owners.
  • A detailed property description which includes size.
  • The purchase price of the property paid by the existing owner.
  • Conditions applicable to the zoning, use and sale of the land.
  • All real rights registered in respect of the property.

The owner will normally have the Title Deed or a copy thereof in his possession. Before signing an offer to purchase carefully scrutinize the Title Deed.

What is The Deeds Office and The Deeds Registry?

There are numerous Deeds Offices throughout South Africa. Each Deeds Office holds a Deeds Registry, containing filed Title Deeds of all the properties in its particular jurisdiction. All the Deeds Registries are linked to a computer network. Your estate agent can, via a computer-linked facility from his office, examine any Title Deed (registered from 1980) in the country’s combined Deeds Registry.

What’s the Difference Between a Property Deed and a Title?

Title is the legal way of saying you own a right to something. For real estate purposes, title refers to ownership of the property, meaning that you have the rights to use that property. It may be a partial interest in the property or it may be the full. However, because you have title, you can access the land and potentially modify it as you see fit. Title also means that you can transfer that interest or portion that you own to others. However, you can never legally transfer more than you own. Deeds, on the other hand, are actually the legal documents that transfer title from one person to another. Sometimes the Deed is referred to as the vehicle of the property interest transfer.

References

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

Do I need a cohabitation contract with my partner?

Cohabitation is a relationship between two people who choose to live together in a monogamous and stable environment. Couples who decide on cohabitation could do so, prior to getting married, as an alternative to marriage, or while they are still in the process of divorce and are already living with their new partner.

The differences between marriage and cohabitation are as follows:

  1. No legal protection if/when the partnership ends.
  2. Claiming maintenance after a separation could be more difficult/impossible.
  3. No court is required to end the relationship.
  4. Partners won’t necessarily inherit from each other.
  5. Cohabitants cannot insure each other’s property.

What happens if there is no written cohabitation agreement?

  • If there is no agreement on the dissolution of a relationship, a person is only entitled to retain the property which s/he has purchased and owns.
  • The couple would be entitled to share in the property proportionately in terms of the contribution which they have made to the relationship. Each person will need to prove what property they have acquired together in order to get back what they are entitled to.
  • If a dispute arises, a court may be approached for assistance.

How are couples protected in cohabitation?

  • In order to protect the couple in cohabitation, rights and obligations of the couple can be protected by way of entering into a cohabitation agreement. The agreement regulates the relationship during its existence and after it has come to an end.
  • A cohabitation agreement can be entered into verbally or in writing. It is recommended that such an agreement be concluded in writing and signed.
  • The agreement can be concluded at any time during the relationship.

A cohabitation contract

If two partners have decided to live together it would be beneficial to have a contract drawn up. These are some elements the contract could contain:

  1. Household expenses: Who is responsible for paying what and from whose account?
  2. Joint property: If you want joint assets rather than separate assets.
  3. Joint home: If you want a home to be registered in both names of the partners, however, the partners don’t have to have equal shares in the property.
  4. End of relationship: Deciding what will happen with each other’s assets after the relationship ends and whether or not one partner will be able to receive maintenance from the other.
  5. Children: If there’s a child, the parental rights and responsibilities should be set out, but this has to be done with legal advice first and should be registered.

Conclusion

Cohabitation can be successful in and of itself, but without a contract there are no ‘safety nets’. This could prove a mistake in relationships where property or a child is involved.

Reference:

  • Anderson, AM. Dodd, A. Roos, MC. 2012. “Everyone’s Guide to South African Law. Third Edition”. Zebra Press.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

What are tenant and landlord duties?

When it comes to letting a property – both the tenant and the landlord should always enter into any letting agreements openly and honestly and intending for each party to get proper value. Often it’s the approach which the parties adopt which will determine whether the relationship between the parties and the benefits they derive therefrom is mutually satisfactory. Furthermore, there are important duties that each party is expected to do.

Non-Statutory Law (Common Law)

The tenant is obliged to:

  1. Pay the proper amount of rent in the proper commodity at the proper place and time.
  2. Take good care of the property and not use it for other purposes than for which it was let.
  3. Restore it to the same condition that he received it at termination of the lease.
  4. Common law states simply that the full rent must be paid at the proper time – the time and date agreed by both the tenant and the landlord. It does not provide the tenant with a 7-day grace period.

Statuary Law (The Rental Housing Act)

The tenant is obliged to:

  1. Make prompt and regular payment of rent and other charges payable in terms of the lease.
  2. Make payment of a deposit – the amount of which should be agreed upfront between the landlord and tenant.
  3. Have a joint incoming and outgoing inspection with the landlord.

The property owner

The prime duty of a property owner is to give a tenant occupation and control of the property. Furthermore, the owner has to maintain the property in its proper condition, subject to fair wear and tear (defined as the ‘unavoidable consequence of the passage of time’). The owner must also ensure that normal running repairs to the property are carried out.

A second important duty of the owner is a guarantee that the tenant will enjoy the undisturbed use and enjoyment of the property for the duration of the lease. This duty has three facets:

  1. The property owner must not unlawfully interfere with the tenant’s rights although he or she is entitled, in certain circumstances, to interfere lawfully if, for instance, the tenant has to vacate the premises temporarily to allow necessary repairs to be done. Although an owner also has a right of inspection, this right must be exercised in a reasonable manner.
  2. The owner must protect the tenant against being disturbed by ‘third parties’ who may claim a stronger right to the property than the tenant. For example, if you sub-let property from a lessee whose lease is invalid (perhaps because it has not been drawn up properly), you could be evicted by the original owner of the property. If this happens, the person who sub-let the property to you is obliged to protect you from being evicted.

Reference:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).