The landlord’s rights if tenant defaults in rent payments

The landlord’s rights if tenant defaults in rent payments

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Landlord and tenant’s rights and obligations are stated in the tenancy agreements signed between the parties. Upon parties entered into the said tenancy agreement, the tenant has the right to use the said premises pursuant to the terms stipulated in the tenancy agreement. In return, the landlord is entitled among others, to collect rent from the tenant as agreed in the tenancy agreement.

Due to the Covid-19 pandemic and global economic downturn, landlords and tenants may face financial difficulties. Tenants’ businesses are affected by the lockdown and landlords are affected due to the default on rental by their respective tenants.

In such situation, it is prudent for the landlord to issue a demand and/or notice of termination against the tenant before proceeding to file a claim in the Court. If the tenant fails to pay the outstanding rental due after receiving the demand and/or notice of termination, the landlord may consider the following legal recourse.

Distress Action

An application for writ of distress can be filed in the Court by the landlord when the tenant fails to settle rental and to vacate the premises despite a notice of termination had been served on the tenant. A writ of distress is a straightforward procedure and it is not a lengthy process compared to filing a writ and statement of claim in the Court.

It is pertinent to note that under Section 5(1) of the Distress Act 1951 (“DA”), the landlord is unable to recover any utility bill in arrears and may only claim up to twelve (12) completed months of the outstanding rentals, immediately preceding the date of application.

An application for writ of distress will be filed in the Court by way of ex parte, which means that the tenant will not be notified of the application until the bailiff or sheriff is present at the premises to seize the movable properties from the tenant.

The movable properties belonging to the tenant which have been seized will be auctioned to recover the rental arrears including the fees and expenses of the bailiff.

The auction will proceed accordingly unless the tenant pays the amount due within 5 days from the date of the notice of the seizure prepared by the bailiff under the DA or obtains an order to restrain such sale.

However, there are restrictions on the item which is seizable from the tenant. Pursuant to Section 8 of the DA, the bailiff cannot seize among others, the tenant’s necessary wearing apparel for himself and his family and tools used in the course of his ordinary trade or business.

One of the disadvantages of the distress proceedings is that it does not terminate the tenancy agreement between the landlord and tenant. It only allows the parties to recover the rental arrears. As such, the landlord is not able to recover and/or repossesses the premises by way of distress proceedings.   

Civil proceedings in Court

An alternative to the landlord to recover rental arrears and vacant possession of the premises is to commence an action in the Court after the tenant failed to respond to the demand and/or notice of termination which was served to the tenant.

It is also important to note that a landlord can rely on Section 28(4)(a) of the Civil Law Act 1956 (“CLA”) to charge and/or claim for double rental if the tenant fails to handover the vacant possession after the notice of termination has been served to the tenant and/or after the expiry of the tenancy period pursuant to the tenancy agreement.

Double rental

The issue in relation to double rent under Section 28(4)(a) of the CLA was substantially discussed in the recent Federal Court case Rohasassets Sdn Bhd v Weatherford (M) Sdn Bhd & Anor [2020] 1 CLJ 638.

Abdul Rahman Sebli FCJ held that that the discretion to charge double-rent vests in the landlord:-

“[26] First of all, the discretion to charge double rent is vested in the landlord and not the Court. The Court’s role in a dispute under section 28(4)(a) of the Civil Law Act is merely to determine whether the option to charge double rent had been properly and lawfully exercised by the landlord. If the discretion had been properly and lawfully exercised by the landlord, the Court has no discretion but to allow the claim for double rent. If, on the other hand, the discretion had not been properly and lawfully exercised, the landlord is not entitled to charge double rent and the Court will rule accordingly.”

In addition, the Federal Court also held that double-rent is chargeable by operation of law:-

[27] In cases like the present, where the tenancy agreements provide for payment of double rent, such rent is chargeable not only by the terms of the agreements but more importantly it is chargeable by operation of law and in this regard section 28(4)(a) provides that it continues to be chargeable “until possession is given up” by the tenant.

Therefore, the landlord is entitled to claim the double rental from the tenant as long as the landlord has complied with Section 28(4)(a) of the CLA and even though the term double rental is not stated in the tenancy agreement.

It is stated in the case Rohasassets there is no requirement on the landlord to show contumacious conduct on the part of the tenant holding over to render the tenant liable to pay the said double rent:-

“[90] At the risk of repetition, it needs to be emphasized that the Court’s duty in a claim under section 28(4)(a) of the Civil Law Act is merely to determine whether the option to charge double rent had been exercised properly and lawfully by the landlord. The Court is not concerned with contumacious conduct on the part of the tenant who holds over. Even if the tenant is not guilty of contumacious conduct, the tenant is still liable to pay double rent if the landlord has decided to charge double rent and does not consent to the tenant’s holding over and has asked the former tenant to vacate the premises.  

Once the landlord obtained a judgment and/or court order against the tenant, he may proceed to apply for leave to issue a writ of possession against the tenant to reclaim the possession of the premises. 

Upon the Court granting an order for the writ of possession, the Court will command the bailiff or sheriff to enter the property and to take possession of the property for the landlord.

However, do note that a landlord is prohibited from entering the premises being occupied by the tenant without a valid Court Order allowing the landlord rightful entry to the premises. Entering and/or locking up the premises without a valid order may amount to trespass. Pursuant to the case of Abdul Muthalib Hassan v Maimoon Hj. Abd. Wahid [1992] 2 CLJ Rep 5, non-payment of rent is no justification for trespass.

In addition, in the case of Nur-Islam Wordwide Industries Sdn Bhd v Yee Kok Sum [2001] 7 CLJ 494, the High Court held that the conduct of the landlord to lock the premises rented by the tenant without a court order when the tenant defaults in rent payments is a wrongful conduct.

Even though there is a clause in the tenancy agreement between the parties to allow the landlord to regain possession of the premises, the landlord cannot defy Section 7(2) of the Specific Relief Act 1950 and Section 4 and 5(1) of the DA which require a court order before the landlord can regain possession of the premises. 

Small claim procedure 

Small claim procedure is an alternative available to the landlord when the amount defaulted by the tenant does not exceed RM5,000.00 but no legal representation is allowed.

Parties are to represent themselves except in circumstances where the defendant is legally required to be represented by an authorized person (i.e. the defendant is a company). Therefore, if the tenant is being sued as a company, the tenant must be represented by a lawyer pursuant to Order 12 rule 1(2) of the Rules of Court 2012 (“ROC”).

Although a company can be represented to defend a claim in the small claim court but a company cannot initiate a small claim to recover rental arrears that does not exceed RM5,000.00. Therefore, legal representation is only available to a company defending a small claim.

Conclusion

Despite there are various legal recourses available to the landlord with regard to the issue of rental default, it is advisable for the landlord to proceed with the first step i.e. negotiation between the parties before initiating any legal action in order to avoid the lengthy legal proceedings and cost incurred in the Court.   

By: Lee Su Ting

DISCLAIMER: This article is for general information only and should not be relied upon as legal advice and/or legal opinion. Messrs Yeoh & Joanne accepts no liability for any loss which may arise from reliance on the information contained in this article. 

 

 

承租人拖欠租金时业主的权利

 

业主(房东)和承租人(租户)的权利与义务将在双方签订的租赁协议中清楚列明。双方签订上述租赁协议后,房客有权根据租赁协议中规定的条款使用上述房屋。作为回报,房东有权按照租赁协议的约定向房客收取租金。

由于Covid-19流行病毒的蔓延和全球经济衰退,房东和租户可能会面临财务困难。租户的业务受到封锁和管制令的影响,而房东也受到各自租户拖欠租金的影响。

在这种情况下,在房东向法院提出索赔之前,房东需要向租户发出要求和/或终止通知。如果租户在收到要求和/或终止通知后未能支付到期未付的租金,房东可以考虑以下法律追索权。

动产扣押行动

房东可以向法院申请扣押令,条件是尽管已向租户送达了终止通知,租户仍未能结清租金并腾空房屋。扣押令是一个简单的程序,与向法院提交申诉书相比,这不是一个漫长的过程。

值得注意的是,根据《1951年动产扣押法令》第5(1)条,房东无法索会任何任何未缴付的水电费,只能索赔申请日期前十二(12)个月的未支付租金。

扣押令的申请将通过单方面方式提交法院,这意味着在执行官到场没收租户的动产之前,不会将申请通知该租户。

被扣押的属于租户的动产将被拍卖,以索回拖欠的租金,包括执行官的费用和开支。

除非租户在执行官根据《1951年动产扣押法令》拟备扣押通知书的日期起计5天内缴付到期应付的款额,或取得禁止出售的命令,否则拍卖将会如期进行。

但是,对租户可出售的物品是有限制的。根据《1951年动产扣押法令》第8条,执行官除其他外,不得检取租户为其本人及家人所需的衣物,以及在日常贸易或业务过程中使用的工具。

扣押程序的一个缺点是它不会终止房东和租户之间的租赁协议。它只允许双方索回拖欠的租金。因此,房东无法通过扣押程序收回和/或占据该房屋。 

法院的民事诉讼 

房东收回拖欠租金和空置房产的另一种办法是,在租户未对送达的要求和/或终止通知作出回应后,向法院提起诉讼。

同样重要的是要注意,如果承租户在终止通知送达给承租人之后和/或据租赁协议的租赁期限根到期之后未能移交空置的房屋,房东可以依据《1956年民事法法令》第28(4)(a)条收取和/或要求双倍租金。

双倍租金

在最近的联邦法院Rohasassets Sdn Bhd v Weatherford (M) Sdn Bhd & Anor [2020] 1 CLJ 638一案中,充分讨论了《1956年民事法法令》第28(4)(a)条下的双倍租金问题。

联邦法院法官Abdul Rahman Sebli认为收取双倍租金的决定权属于房东:-

[26]首先,收取双倍租金的酌处权属于房东,而不是法院。根据《1956年民事法法令》第28(4)(a)条,法院在争议中的作用仅仅是确定房东是否恰当合法地行使了收取双倍租金的选择权。如果业主适当合法地行使了酌处权,法院除了允许双倍租金索赔之外别无选择。另一方面,如果没有适当和合法地行使酌处权,房东就无权收取双倍租金,法院将据此作出裁决。”(原文翻译)

此外,联邦法院还认为,根据法律规定,双倍租金是可以被索取的:-

[27]在目前这种情况下,租赁协议规定支付双倍租金,这种租金不仅根据协议的条款收取,而且更重要的是根据法律的实施收取,在这方面,28条第(4)(a)项规定继续收取租金,“直到承租人放弃占有为止”” (原文翻译)

因此,只要房东遵守《1956年民事法法令》第28(4)(a)条,即使租赁协议中没有规定双倍租金,房东也有权向租户索取双倍租金。

Rohasassets的案例中,房东没有必要出示那是租户的故意行为,以使租户有责任支付双倍租金

[90]有重复的危险,需要强调的是,法院在根据《1956年民事法法令》第28(4)(a)节提出的索赔中的职责仅仅是确定房东是否适当和合法地行使了收取双倍租金的选择权。法院并不关心占有房屋的租户的无礼行为。即使租客并无恶意,但假如业主决定收取双倍租金,而又不同意租户的留下,并要求前租户迁出,租户仍须缴付双倍租金。” (原文翻译)

 一旦房东获得针对租户的判决和/或法院令,他可以申请批准向租户发出占有令,要求收回房屋的占有权。

在法院批准占有令后,法院将命令执行官进入该房屋并取回该房屋的占有权。

但是,请注意,在没有有效的法院命令允许房东合法进入房屋的情况下,房东不得进入被租户占用的房屋。在没有有效命令的情况下进入和/或锁上房屋可能构成非法侵入罪。根据Abdul Muthalib Hassan v Maimoon Hj. Abd. Wahid [1992] 2 CLJ Rep 5案例,不支付租金不是一个侵入该房屋的理由。

此外,在Nur-Islam Wordwide Industries Sdn Bhd v Yee Kok Sum [2001] 7 CLJ 494一案中,高等法院认为,当租户拖欠租金时,房东在没有法院命令的情况下锁上租户租用的房屋的行为是一种不法行为。

即使双方之间的租赁协议中有一项条款允许房东收回对该房屋的占有权,房东也不能无视《1950年特定救济法案》第7(2)条和《1951年动产扣押法令》第4和第5(1)条的规定,这些规定要求在房东收回对该房屋的占有权之前必须有法院命令。 

小额索赔程序

当租户拖欠租金金额不超过5000令吉,小额索赔程序是房东的其中一项选择以索回拖欠租金,但是小额索赔程序是不允许有律师代表。

除非法律规定被告必须有律师代表(即被告是一家公司),否则各方应代表自己。因此,如果租户作为公司被起诉,根据《2012年法院规则》第12条款1(2)条规则,租户必须由律师代表。

虽然一家公司可以在小额索赔法院为索赔进行辩护,但一家公司不能通过小额索赔来提告和索回不超过5000令吉的租金欠款。因此,律师代表仅适用于为小额索赔进行辩护的公司。

结论

尽管房东在拖欠租金问题上有各种法律资源,但房东最好在提起任何法律诉讼之前进行第一步解决方法,即双方之间的谈判,以避免冗长的法律程序和法院产生的费用。

文章来自于:

李淑婷律师(Lee Su Ting) 

免责声明:本文仅供参考,不应作为法律建议和/或法律意见。Yeoh & Joanne律师事务所不会承担因依赖本文所含信息而产生的任何损失的责任。

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