Tenancy can be generally categorized into the following types:
- Fixed-term - Tenancy that has a definite beginning and ending dates and may have an option to renew in the agreement, subjected to the consensus between the landlord and the tenant.
- Periodic - Tenancy for a certain time period as determined by the term of the tenancy agreement. The tenancy can be from year to year; month to month or week to week.
- Tenancy at will - Tenancy where a tenant occupies a property with the consent of the landlord but there is no written agreement between the parties that specifies a definite payment of rent or the tenure of the rental. It can be terminated by either the landlord or the tenant at any time by giving a reasonable notice.
A preliminary agreement or a ‘Letter of Offer to Rent’ would be signed once the landlord and the tenant agree on a tenancy terms. Upon signing the Letter of Offer, the tenant would be required to pay a deposit (usually 1 month rental + an agreed sum for the utility. The rental deposit can be higher for a furnished property). Thereafter, a Tenancy Agreement would be executed between the 2 parties. The Agreement should be duly stamped.
The following are some important points to be clearly specified in a tenancy agreement in order to avoid future conflict:
- Permitted use of the premises: The use of the premises must be in compliance with the existing laws and regulations. There are instances where the property is being rented out for residential use while it is a purely commercial entity and vice versa.
- Sub-tenancy: Is this permitted or not permitted by the landlord? This is important as there it is not uncommon to find tenants sub-letting the premise to a sub-tenant without the expressed consent of the landlord. By doing this, the tenant would then be in breach of the terms and conditions of the tenancy agreement.
- Fixtures and fittings: If the premises comes with this then an inventory list should be done. This should be done and attached to the Letter of Offer To Rent at the initial stage. This is important as there are cases where there is dispute in what the tenants saw earlier at the viewing of the property was later not provided for in the tenancy agreement by landlord.
When the tenant defaults in paying the rent, under the Specific Relief Act 1950, the landlord is prohibited from evicting the tenant (e.g. changing the lock, to retake possession of the property by force, etc.) and/or recover possession of the demised premises without a court order. Otherwise the landlord could be sued by the tenant (e.g. for trespassing). It is also of not much use in making a police report either regarding such matters as it is deemed to be a civil matter. Under such situation, the landlord is advisable to engage a lawyer who is experienced with tenancy matters to evict the tenant via proper legal procedure, which would involves the following approach:
- To notify the tenant to regulate the rental;
- If the tenant still does not or refuse pay up the outstanding rent, the landlord will issue a notice of termination to the tenant;
- The landlord's lawyer will then file a law suit against the tenant for the arrears of rent and to seek for court order for vacant possession of the premises. It will take about 3 months to obtain the court judgement;
- Once the judgement is made on the arrears and the order for vacant possession is given, the landlord’s lawyer will have to file a writ of possession to ask the bailiff to re-take possession of the property. It will again take about another 3 another months.
The whole legal process would take about 6-7 months for the landlord to re-take the possession of the property, which would cost about RM10,000 for the legal proceeding, if it is not contested by the tenant.
In addition, under the Civil Law Act 1956, at the court’s discretion, the landlord can claim double rent from the tenant from the expiry of the notice of eviction until the possession is given to the landlord.
Alternatively, if it is still within 12 completed months of the tenancy immediately preceding the date of the application, the landlord could go through the route of the Distress Act 1951 to apply for warrant of distress to recover the outstanding rent from the tenant, where the court bailiff will seize and sell the tenant’s goods via auction in satisfaction of the outstanding rent. This approach would not result in the termination of the tenancy agreement. However, it may be particularly effective against the tenanted commercial property (e.g. a shoplot or retail outlet) as the tenant would usually pay up before the landlord proceed further in order to safeguard and avoid jeopardizing the branding of his/her business.
