Rental Payment Guarantee
Template — South Africa
An attorney-drafted Rental Payment Guarantee template designed specifically for South African landlords and tenants. This comprehensive, legally compliant document provides landlords with third-party security for tenant rental obligations — covering corporate guarantees, personal suretyship by directors, family member guarantees, demand and conditional guarantee structures, and the critical writing requirements under the General Laws Amendment Act 50 of 1956. Built for compliance with the Rental Housing Act 50 of 1999, the Consumer Protection Act 68 of 2008, and South African common law of suretyship.
Drafted by qualified South African attorneys
Reviewed for compliance with current legislation · Last updated April 2026
Why Your Business Needs This Agreement
Verbal Guarantee Promises That Are Legally Worthless
One of the most common and costly mistakes in South African property letting occurs when a landlord accepts a verbal promise from a director, parent company, or family member to "stand good for the rent" without reducing it to writing. Under Section 6 of the General Laws Amendment Act, this verbal guarantee is void and completely unenforceable — regardless of how sincere the promise was or how many witnesses heard it. When the tenant inevitably defaults, the landlord discovers they have no legal recourse against the person who promised to guarantee the rent. The financial impact is devastating: for a commercial lease with monthly rent of R50,000 and a six-month eviction timeline, the landlord loses R300,000+ with zero prospect of recovery from the guarantor. This template eliminates this risk entirely by providing a legally compliant written guarantee.
Guarantee Released by Unilateral Lease Changes
South African common law provides that a material alteration to the principal obligation (the lease) releases the surety if the surety did not consent to the change. Landlords who increase rent, extend the lease, amend payment terms, or vary any other lease condition without obtaining the guarantor's written consent may inadvertently release the guarantee entirely — discovering too late that their security has evaporated. This scenario is particularly common when the landlord and tenant agree to "informal" lease amendments (verbal rent increases, handshake extensions) without considering the impact on the guarantee. The continuing guarantee provisions in this template prevent this outcome by ensuring the guarantee survives all lease variations without requiring separate guarantor consent.
Guarantor Raising Excussion Defence to Delay Payment
Without a renunciation of the benefit of excussion, a guarantor can insist that the landlord first sue the tenant, obtain judgment, attempt to execute against the tenant's assets, and prove that the tenant has no means to pay — before the guarantor is obliged to pay a single rand. In the South African court system, this process can take 12-18 months, during which the landlord continues to suffer rental arrears, property deterioration, and legal costs. The excussion defence is perfectly legitimate under common law, which is why commercial guarantees must contractually renounce it. This template includes comprehensive defence renunciations that have been upheld by South African courts, ensuring the landlord can claim directly against the guarantor upon tenant default.
Guarantee Not Transferring When Property Is Sold
A guarantee is a separate contract between the landlord and guarantor that does not automatically transfer when the property is sold — even though the lease itself survives the sale under huur gaat voor koop. The new property owner who assumed they had the benefit of the previous landlord's guarantee discovers they cannot enforce it because it lacks a successors-in-title clause. This leaves the new owner with a lease but without the security that was a fundamental part of the letting decision. The financial exposure can be enormous for high-value commercial leases where the guarantee represented the primary risk mitigation.
Business Rescue Moratorium Leaving Landlords Exposed
When a tenant enters business rescue, the Section 133 moratorium prevents the landlord from suing the tenant or executing against the tenant's assets — but rent continues to accrue during the rescue process, which can take 3-12 months. Landlords without a properly structured guarantee that expressly survives business rescue face a double blow: they cannot claim against the tenant (moratorium) and they cannot claim against the guarantor (if the guarantee is accessory and arguably affected by the rescue). A demand guarantee structured as an independent obligation — as provided in this template — allows the landlord to claim against the guarantor immediately, despite the tenant being under business rescue protection.
Unlimited Guarantee Exposure Deterring Potential Guarantors
Landlords who present guarantors with unlimited, uncapped guarantee obligations often find that creditworthy guarantors refuse to sign — or sign reluctantly and then dispute the guarantee when called upon. A director asked to guarantee an unlimited liability for a five-year escalating commercial lease faces potential exposure of several million rands, which may exceed their personal net worth. Without clear monetary caps, time limitations, and defined scope, the guarantee becomes a negotiation obstacle rather than a security tool. This template provides structured limitation options that give landlords adequate security while making the guarantee commercially acceptable to reasonable guarantors.
What is a Rental Payment Guarantee?
A Rental Payment Guarantee is one of the most effective risk mitigation tools available to South African landlords — providing recourse against a third-party guarantor when a tenant defaults on rental obligations. While a security deposit provides limited protection (typically one to two months' rent), a rental guarantee extends the landlord's security to the full value of the lease and beyond, binding a creditworthy third party to the tenant's obligations for the entire lease term. In a market where tenant default, rental arrears, and the lengthy eviction process under the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE Act) can leave landlords exposed for six months or more of unpaid rent, a properly structured guarantee is often the difference between a commercially viable letting and a devastating financial loss.
South African law imposes one absolute, non-negotiable requirement on rental guarantees: under Section 6 of the General Laws Amendment Act 50 of 1956, any contract of suretyship or guarantee must be in writing and signed by the surety or guarantor. A verbal guarantee — no matter how clearly agreed or how many witnesses heard the promise — is void and completely unenforceable. This statutory requirement has been upheld by South African courts without exception, including in Fourlamel (Pty) Ltd v Maddison, where the Supreme Court of Appeal confirmed that Section 6 is peremptory and no equitable exceptions apply. This means that landlords who rely on verbal assurances from directors, parents, or holding companies have zero legal recourse if the tenant defaults — making a properly executed written guarantee essential.
The template accommodates the two primary guarantee structures used in South African commercial and residential letting. A corporate guarantee is used where a parent company, holding company, or related entity guarantees the rental obligations of a subsidiary, associated company, or group entity. This is standard practice in corporate leasing where the actual tenant entity may be a special purpose vehicle (SPV) or newly incorporated company with limited assets and trading history. An individual guarantee (personal suretyship) is used where a company director, shareholder, or family member binds themselves personally for the tenant's obligations — a common requirement when landlords let to small businesses, start-ups, or tenants with insufficient financial track records. Both structures are legally distinct and have different implications for the guarantor's exposure, defences, and release.
A critical design choice in any South African rental guarantee is whether it is structured as a conditional guarantee (requiring the landlord to prove the tenant's default before claiming) or a demand guarantee (payable on the landlord's first written demand, without requiring proof of default). Demand guarantees provide the strongest protection for landlords, as they eliminate the delay and expense of proving default, but they impose a correspondingly greater risk on the guarantor. Most South African commercial lease guarantees are structured as demand guarantees with the guarantor bound as co-principal debtor — the industry standard that this template follows, while providing the option for conditional structures where the parties prefer a more balanced approach.
This template also addresses the interaction between the guarantee and the tenant's deposit under the Rental Housing Act 50 of 1999, the effect of the Consumer Protection Act's Section 14 cancellation right on the guaranteed obligations, the guarantor's position if the tenant enters business rescue under Chapter 6 of the Companies Act 71 of 2008, and the comprehensive renunciation of common law defences (excussion, division, and cession of actions) that is essential for an enforceable commercial guarantee in South Africa.
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Section 6 of the General Laws Amendment Act 50 of 1956 requires all rental guarantees to be in writing and signed by the guarantor — a verbal guarantee is void and completely unenforceable, with no exceptions for equity or estoppel
A guarantor bound as co-principal debtor in solidum can be sued directly by the landlord without first pursuing the tenant — eliminating the 12-18 month delay that excussion procedures cause in South African courts
The business rescue moratorium under Section 133 of the Companies Act does not extend to guarantors — landlords can claim under the guarantee even while the tenant is under business rescue protection
A material alteration to the lease can release the guarantor under common law if the guarantee does not include continuing guarantee provisions — making "survival" clauses essential for enforceable commercial guarantees
Without a successors-in-title clause, a rental guarantee does not automatically transfer when the property is sold — leaving new owners without the security they may have relied upon in their purchase decision
Key Clauses Included
This Rental Payment Guarantee template covers 11 essential sections, each drafted by South African attorneys.
Guarantee & Indemnity
The core provision where the guarantor unconditionally and irrevocably guarantees payment of all amounts owed by the tenant under the lease — including rental, escalations, operating costs, utility charges, damages, reinstatement costs, and legal costs on an attorney-and-client scale. The indemnity component creates a separate, independent obligation for the guarantor to indemnify the landlord against any loss arising from tenant default, ensuring the landlord has both a guarantee claim (accessory to the lease) and an indemnity claim (independent of the lease) available as remedies.
Scope of Guaranteed Obligations
Precisely defines which lease obligations are covered by the guarantee — whether limited to rental and escalation only, or extending to all amounts payable under the lease including operating cost contributions, utility charges, reinstatement costs, and legal costs. Specifies whether the guarantee covers the initial lease term only or extends to renewals, extensions, and holding-over periods. Includes provisions for monetary caps on the guarantor's liability and whether the cap includes or excludes interest and legal costs.
Demand & Payment Mechanics
Establishes the process for the landlord to call on the guarantee — whether by first written demand (demand guarantee) or upon proof of tenant default (conditional guarantee). Specifies the form of the demand notice, the documentation required, the guarantor's obligation to pay within a specified timeframe (typically 7-14 business days after demand), and the landlord's right to make multiple demands up to the guaranteed amount. Includes provisions for partial demands and the allocation of payments received from both the tenant and guarantor.
Co-Principal Debtor & Solidarity
Binds the guarantor as co-principal debtor in solidum with the tenant — not merely as surety. This dual capacity is critically important because it prevents the guarantor from relying on technical defences available only to sureties under South African common law. As co-principal debtor, the guarantor's liability is primary and independent, allowing the landlord to proceed directly against the guarantor without first pursuing the tenant. South African courts have consistently upheld co-principal debtor clauses as valid and enforceable.
Renunciation of Common Law Defences
Comprehensive waiver of the common law defences available to guarantors and sureties: the benefit of excussion (requiring the landlord to exhaust remedies against the tenant first), the benefit of division (sharing liability proportionately among co-guarantors), and the benefit of cession of actions (requiring the landlord to cede its rights against the tenant to the guarantor upon payment). Without these renunciations, the guarantor can delay or frustrate the landlord's recovery by insisting on procedural steps that add months to the enforcement process.
Continuing Guarantee & Survival
Ensures the guarantee remains in full force despite changes to the lease that would otherwise release a surety under common law — including rental increases, lease extensions, amendments to the lease terms, release of co-guarantors, granting of indulgences to the tenant, and variations to the underlying obligations. Without this provision, any material change to the lease could inadvertently release the guarantor, leaving the landlord without the security they relied upon when concluding the lease.
Interaction with Deposit & Other Security
Clarifies the relationship between the guarantee and any deposit held under the Rental Housing Act. Specifies whether the landlord must first apply the deposit before claiming under the guarantee, or whether the guarantee operates independently — allowing the landlord to choose the most convenient remedy. Addresses the interaction with other security instruments (mortgage bonds, cessions, bank guarantees) and the landlord's right to hold and enforce multiple forms of security simultaneously without being required to exhaust one before calling on another.
Release, Substitution & Expiry
Defines the conditions under which the guarantor may be released — typically only upon full and final settlement of all lease obligations, provision of a substitute guarantor acceptable to the landlord, or expiry of a specified guarantee period. Covers the process for substituting guarantors (common when company directors change), the landlord's right to approve or reject substitute guarantors based on financial standing, and the guarantee's survival beyond lease termination for obligations that remain outstanding.
Corporate Authority & Representations
Where the guarantor is a juristic person (company, close corporation, or trust), the section requires representations that the guarantee falls within the entity's capacity and objects, that the necessary board or trustee resolutions have been passed authorising the guarantee, that the guarantee does not contravene the entity's memorandum of incorporation or trust deed, and that the signatory has authority to bind the entity. Annexes the authorising resolution as proof of corporate authority — essential for enforceability against corporate guarantors.
CPA & Business Rescue Provisions
Addresses the impact of the Consumer Protection Act's Section 14 cancellation right on the guaranteed obligations — specifying that the guarantor remains liable for any cancellation penalty and outstanding amounts even if the tenant exercises its CPA cancellation right. Also addresses the guarantor's position if the tenant enters business rescue under Chapter 6 of the Companies Act 71 of 2008 — confirming that the guarantee is not affected by the business rescue moratorium and the landlord can proceed against the guarantor despite the tenant being under business rescue protection.
Dispute Resolution & Governing Law
Specifies that the guarantee is governed by the laws of the Republic of South Africa, establishes the dispute resolution process (typically aligned with the dispute resolution provisions in the underlying lease), and includes domicilium citandi et executandi (chosen addresses for legal notices) for the landlord and guarantor. Provides for the guarantor's consent to the jurisdiction of the Magistrate's Court where the amount in dispute falls within its jurisdiction, expediting enforcement of smaller claims.
South African Law Compliance
General Laws Amendment Act 50 of 1956
Section 6 is the single most important statutory provision governing rental guarantees in South Africa. It requires that all contracts of suretyship — and any contract whereby a person undertakes to answer for the debt, default, or miscarriage of another — must be in writing and signed by the surety or guarantor. An oral guarantee is void and completely unenforceable, regardless of the circumstances. The Supreme Court of Appeal confirmed in Fourlamel (Pty) Ltd v Maddison that Section 6 is peremptory and admits no exceptions based on equity, estoppel, or partial performance. This means that a landlord who accepts a verbal guarantee from a director or parent company has zero legal recourse when the tenant defaults. The writing must contain the material terms of the guarantee — the identity of the parties, the obligations guaranteed, and the guarantor's signature — to be enforceable.
Rental Housing Act 50 of 1999
The Rental Housing Act governs deposit handling for residential leases and interacts with guarantee provisions in several important ways. The landlord must still comply with the Act's deposit requirements (investment in an interest-bearing account, refund within 14 days) regardless of whether a guarantee is also in place. The guarantee does not replace or modify the deposit requirements — it provides additional security beyond the deposit. For residential leases, the guarantee should specify whether the landlord must exhaust the deposit before claiming under the guarantee, and the guarantor's position regarding the deposit interest that accrues for the tenant's benefit under the Act.
Consumer Protection Act 68 of 2008
The CPA's Section 14 cancellation right has a direct impact on rental guarantees. Where the tenant exercises the right to cancel a fixed-term lease with 20 business days' notice, the guarantee should specify that the guarantor remains liable for the "reasonable" cancellation penalty payable by the tenant, any outstanding rental and charges up to the termination date, and any reinstatement obligations. Without specific CPA provisions in the guarantee, disputes arise about whether the guarantor's obligation terminates when the tenant cancels under the CPA, or whether it extends to the cancellation penalty and post-cancellation obligations.
Companies Act 71 of 2008
Chapter 6 of the Companies Act governs business rescue proceedings and has significant implications for rental guarantees. When a tenant enters business rescue, a moratorium on legal proceedings against the tenant takes effect under Section 133 — but this moratorium does not extend to the guarantor. The landlord can proceed against the guarantor for unpaid rent and other lease obligations even while the tenant is under business rescue protection. However, if the business rescue plan compromises or reduces the tenant's obligations, complex questions arise about the guarantor's liability for the compromised portion. South African courts have held that independent demand guarantees survive business rescue, while accessory suretyship agreements may be affected. This template addresses both scenarios.
South African Common Law of Suretyship and Guarantee
The common law provides guarantors with several defences that can frustrate enforcement if not contractually renounced. The benefit of excussion (beneficium ordinis seu excussionis) requires the creditor to exhaust remedies against the principal debtor before claiming against the surety. The benefit of division (beneficium divisionis) allows co-sureties to insist on proportionate liability. The benefit of cession of actions (beneficium cedendarum actionum) requires the creditor to cede its rights against the debtor to the surety upon payment. Additionally, common law provides that a material alteration to the principal obligation releases the surety — meaning any change to the lease terms could inadvertently release the guarantor. All of these defences are routinely renounced in South African commercial guarantees, and this template includes comprehensive renunciation provisions.
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Our guided wizard walks you through every clause — no legal knowledge required. Attorney-drafted, South African law compliant.
Assess the guarantee requirement and structure
Determine the type of guarantee required — corporate guarantee (parent/holding company), personal guarantee (director/shareholder), or individual guarantee (family member). Assess the guarantor's financial standing through credit checks and financial statements. Decide whether the guarantee should be a demand guarantee (payable on first demand) or conditional guarantee (requiring proof of default), and whether a monetary cap is appropriate. Consider the total lease exposure including escalation, operating costs, and potential legal costs.
Gather guarantor information and verify authority
Collect the guarantor's full details — for individuals: full name, ID number, residential address, and financial information. For companies: company name, registration number, registered address, and director details. For corporate guarantors, verify that the guarantee falls within the company's capacity by reviewing the MOI and obtaining a board resolution authorising the guarantee. For trust guarantors, verify the trust deed permits suretyship and obtain a trustee resolution.
Customise the template for your transaction
Complete the template by selecting the guarantee type (demand or conditional), inserting the guaranteed obligations (specific amounts or all lease obligations), setting the monetary cap and guarantee period, choosing the defence renunciation provisions, and specifying the interaction with the deposit and any other security. Ensure the guarantee references the specific lease agreement by date, parties, and property address to satisfy the Section 6 identification requirements.
Review for legal compliance
Verify the guarantee satisfies the Section 6 writing requirement of the General Laws Amendment Act, contains all material terms (parties, obligations, signature), includes the co-principal debtor clause and defence renunciations, addresses CPA cancellation and business rescue scenarios, and is consistent with the underlying lease. For corporate guarantors, verify the authorising resolution is properly passed and annexed. For married guarantors, consider the Matrimonial Property Act implications.
Execute and secure the guarantee
Have the guarantor sign the guarantee in the presence of witnesses (while witnessing is not legally required for guarantees, it provides valuable evidentiary support). For corporate guarantors, ensure the signatory is authorised per the board resolution. Store the original guarantee securely with the lease. Provide certified copies to all parties. Note the guarantee terms in the property management system, including the guarantee period, monetary cap, and renewal or expiry dates. Review the guarantee when the lease is renewed or varied to ensure it remains effective.
Frequently Asked Questions
A Rental Payment Guarantee is a legally binding commitment by a third party (the guarantor) to pay a tenant's rental obligations if the tenant fails to do so. It is fundamentally different from a deposit in several critical respects. A deposit is a fixed sum of money (typically one to two months' rent) held by the landlord as security — it provides limited protection capped at the deposit amount. A guarantee, by contrast, is a third party's promise to pay that can cover the full value of the lease, including all future rental, escalations, operating costs, damages, reinstatement, and legal costs — potentially millions of rands over a long-term commercial lease. The guarantee does not tie up the tenant's or guarantor's capital the way a deposit does. For residential leases, the Rental Housing Act requires deposits to be held in interest-bearing accounts with strict handling requirements, but no such requirements apply to the guarantee instrument itself. In practice, landlords of commercial property almost always require both a deposit and a guarantee to achieve adequate security.
What You Get With This Template
Drafted specifically for South African law — fully compliant with the General Laws Amendment Act Section 6 writing requirement, Rental Housing Act deposit provisions, CPA cancellation provisions, and common law of suretyship
Covers both corporate guarantees (parent company, holding company, group entity) and personal guarantees (director, shareholder, family member) with appropriate provisions for each
Includes both demand guarantee and conditional guarantee options — allowing the parties to choose the structure that best suits their risk profile and commercial relationship
Comprehensive co-principal debtor clause and defence renunciation provisions that have been upheld by South African courts — ensuring the landlord can claim directly against the guarantor without first pursuing the tenant
Continuing guarantee provisions that survive lease amendments, extensions, and renewals without requiring separate guarantor consent — preventing inadvertent release of the guarantee
Specific provisions addressing CPA Section 14 cancellation rights and Chapter 6 business rescue proceedings — covering the two most common scenarios that create guarantee enforcement uncertainty
Successors-in-title clause ensuring the guarantee transfers to new property owners upon sale — a critical provision frequently overlooked in practice
Structured monetary cap and limitation options that provide adequate landlord security while making the guarantee commercially acceptable to reasonable guarantors