In 1996, the legislature enacted the Land Reform (Labour Tenants) Act, No 3 of 1996 (Act). The objective of the Act was to protect all persons denied access to land as a result of past racially discriminative laws, and which persons had taken occupancy and enjoyed the use of land on farms upon which they were providing labour.
The Act confers certain rights on labour tenants and these rights create an encumbrance on farm owners’ use and enjoyment of their farms, and will impact any potential transactions concerning such farms. But who qualifies as a ‘labour tenant’ and how should farm owners deal with their rights?
As defined in s1 of the Act, a labour tenant is “a person who has or has had the right to reside on a farm; has or has had cropping or grazing rights thereon, in consideration of which he provides labour to the owner or lessee; and whose parent or grandparent resided on the farm and had similar rights”. As noted in Mokwena v Marie Appel Beleggings CC and Another  2 All SA 157 (LCC), the definition’s elements are cumulative and are to be read conjunctively, and a determination of their satisfaction involves a factual inquiry in each case.
A labour tenant has two main rights which may impact a seller and purchaser of a farm where labour tenants are in occupation: (i) the labour tenant’s right to occupy and use farm land in terms of s3 of the Act; and (ii) the labour tenant’s right to acquire land in terms of s16 of the Act.
The right of a labour tenant to bring an application to acquire a right in land, will in most cases be obsolete considering that such a right lapsed on 31 March 2001. So unless such an application was made to the Director-General of the Department of Rural Development and Land Reform (DG) on or before 31 March 2001, and for some reason remains pending, any applications made post 31 March 2001 will fall on this hurdle alone.
Notably, what gives this Act its relevance to this day is the fact that the right of a person who was a labour tenant on or before 2 June 1995, together with their family, to occupy and use farm land still persists.
The Act provides that an agreement may be concluded with the labour tenant in terms of which the labour tenant is compensated, alternatively relocated in lieu of their right to occupy and use the farm land.
An important aspect regarding this latter agreement is that it will be of no force and effect until such time that it is certified by the DG or its terms incorporated in an order of court or that of an arbitrator in terms of s3(7) of the Act.
As such, parties to transactions involving farms on which persons deemed to be labour tenants have taken occupancy need to be aware of the rights of labour tenants contained in the Act, and the impact those rights may have on their transactions and the enjoyment and use of their farms.