Landlord-Tenant Disputes: What Every Property Owner Should Know

‍INTRODUCTION

Renting out property can be a good way generate income for properties you own which are unoccupied. However, it is not as simple as it sounds. If you are not careful, you may run into potential issues especially if conflicts with your tenant were to arise. This is particularly true if you are not well-advised on what of your rights and obligations as a landlord. For instance, there may be disputes on the deposits, what constitutes fixtures and chattels, and who should pay for plumbing and electrical or wiring issues.

WHAT ARE THE LAWS WHICH ARE APPLICABLE TO A TENANCY?

For the moment, there is no specific legislation covering rental agreements.[1] According to the National Land Code, any rental under 3 years is defined as a “tenancy”. This does not require registration with the Land Office. However, if it exceeds 3 years, then it is defined as a “lease”, which would require registration.

Although Malaysia does not have a specific legislation governing tenancies which provides a comprehensive regulatory framework for tenancies, there are a few existing legislations which are relevant. This includes:

·       The Contracts Act 1950. This is a legislation which applies to contracts in general;

·       The Civil Law Act 1956. This legislation covers various matters including rental payments and even the liability of the tenant to pay double rental for theperiod from which after the landlord lawfully requests for the tenant to surrender possession of the premises until the premises is so delivered; and

·       The Distress Act 1951.  This governs distress actions, which can be used by the landlord as a way to recover outstanding rentals from the tenant.

This article will serve as a basic guide for landlords in Malaysia by explaining the three important things you need to know as landlord.

 THREE IMPORTANT THINGS A LANDLORD SHOULD KNOW

1.          Why you need a well-written tenancy agreement?

A rental agreement, also known as a tenancy agreement, is a legally binding contract between a landlord and a tenant. It outlines the terms and conditions governing the rental of a property. In Malaysia, rental agreements can take various forms. While there is no law requiring that a tenancy agreement must be in writing, having one is essential and can reduce issues down the line, especially in ensuring any potential conflicts or disputes are resolved efficaciously.

A tenancy agreement should includethe following:

·       The details of the property;

·       The duration of the tenancy;

·       The deposit amount;

·       The rental amount;

·       An option for renewal of the tenancy;

·       How and when the rental is to be paid;

·       The landlord’s obligations;

·       The tenant’s obligations; and

·       A termination clause.

In short, having a well-written tenancy agreement increases the chances that everything runs smoothly throughout the duration of the tenancy, as well as give you some peace of mind.

2.          Can a landlord evict a tenant if rentals are not paid on time?

If the tenant fails to pay rent within the stipulated timeframe, the landlord of course has a right to evict the tenant. However, the landlord cannot simply kick the tenant out. This is because section 7(2) of the Specific Relief Act 1950 provides that a landlord is not entitled to evict his tenant or recover possession of the property without a court order. This also means that a landlord cannot resort to using certain tactics such as changing the locks of the property as the landlord can be sued by the tenant.[2]

Hence, what the landlord should do in such event is to seek the assistance of a lawyer to send a letter of demand to the tenant to pay any outstanding rentals. If the tenant does not comply, then the landlord may instruct his lawyer to issue a notice of termination of the tenancy agreement and file a suit to obtain a court order.

3.          What can a landlord do apart from evicting a tenant if the tenant does not pay rentals?

 Another option available to the landlord against a tenant who does not pay rentals on time isa distress action. A distress action is where the landlord applies for a writ (or warrant) of distress to direct the sheriff or bailiff to seize the tenant’s movable property in the apartment. The property will then be sold and the monieswill be used to pay the landlord to settle the tenant’s rental arrears. The governing statute for this action is the Distress Act 1951 and its procedure is in Order 75 of the Rules of Court 2012.

 However, it must be noted that in a distress action:

 ·       The landlord may only recover outstanding rentals for a period of up to 12 completed months of the tenancy preceding thedate of application for the issuance of warrant of distress[3];

 ·       Not all movable properties within the premisescan be seized and auctioned off by the sheriff or bailiff. For instance, the bailiff cannot seize, properties not belonging to the tenant, the tenant’s clothing, as well as tools and equipment to be used in his trade[4];and

 ·       Vacant possession of the premises cannot be recovered unless it is deserted by the tenant. Hence, if the landlord intends to recover vacant possession, he would have to mount another suit for an order for possession of the premises.

 CONCLUSION

 Finding a tenant may be very easy, but you must exercise caution. It is important to seek legal advice early on in order not to waste time or money as the tenancy progresses. The best strategy in saving costs is consulting a lawyer early and having a well-written agreement drafted, or having any existing tenancy agreement you may already have thoroughly reviewed. In this way, many disputes with the tenant may be avoided, which would save you time and money.

This article is written by  Raja Nadhil Aqran (Partner) and only contains general information. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such.

 For further information, kindly contact info@aqranvijandran.com.

[1] The Residential Tenancy Act, which is aimed at addressing rental property issues,will be tabled in Parliament this year.

[2] See section 8(1) of the Specific Relief Act 1950.

[3] See section 5(1) of the Distress Act 1951.

[4] See section 5(1) of the Distress Act 1951.

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