Q.
Tenant complaint to you that his landlord has sold the house, the new owner wants him to move out immediately despite the tenancy still left with nine (9) months. Can the new owner (purchaser) insist that the tenant move out as he is not the original landlord in the tenancy agreement?
A.
In Malaysia, when a rented house is sold to a new buyer, the rights and obligations of both the tenant and the new buyer are governed by the terms of the existing tenancy agreement and local laws. The sale of the property doesn’t automatically terminate the tenancy, and the new owner must respect the tenant’s rights. Here’s how such situations are typically treated:
1. Tenancy Agreement Remains in Effect
When a property with an existing tenant is sold, the tenancy agreement **remains binding** on the new owner. The sale of the property does not automatically terminate the lease. This means that:
- The tenant has the right to stay in the property until the lease expires, as long as they adhere to the terms of the tenancy agreement.
- The new buyer effectively "steps into the shoes" of the previous landlord and inherits all the rights and responsibilities under the existing tenancy.
2. New Buyer’s Right to Vacant Possession
If the new buyer wants vacant possession (i.e., the property to be empty), they must follow the legal procedures to terminate the tenancy. The new buyer cannot simply demand that the tenant leave, even if the property is now owned by them. The options are as follows:
- Termination by Agreement: The new owner and the tenant can negotiate an early termination of the lease. This might involve offering the tenant compensation (such as paying for relocation costs) or some other form of incentive.
- Notice to Vacate: The new owner must provide the tenant with the appropriate notice as per the tenancy agreement or the local laws. If the tenancy agreement allows termination with a specific notice period, the new owner can serve this notice.
- Expiry of Lease: The new owner can simply wait until the existing tenancy agreement expires, after which they can take possession of the property without renewing the lease.
3. Statutory Notice Requirements
In Malaysia, the notice period that a new owner must give the tenant will depend on the terms of the tenancy agreement. Typically, it is:
- One Month for a month-to-month tenancy
- The duration stated in the tenancy agreement for longer fixed-term tenancies (such as a yearly lease).
The new owner must respect the notice period and give the tenant adequate time to vacate. If no specific notice period is mentioned in the agreement, the notice period is often assumed to be one month.
4. Compensation for Early Termination
If the new buyer wants to take vacant possession **before the lease expires**, they might need to negotiate compensation with the tenant. Compensation can cover:
- Relocation expenses
- Loss of deposit (if applicable)
- Rent reduction or waiver for early termination (to incentivize the tenant to leave early)
This can lead to a mutually beneficial agreement where the tenant vacates earlier in exchange for fair compensation.
5. Legal Eviction Process
If the tenant refuses to vacate after the tenancy has been legally terminated (whether by the agreed notice or expiry of the tenancy agreement), the new buyer cannot forcefully evict the tenant. The buyer would need to:
- Apply to the court for a **writ of possession** to legally evict the tenant.
- Enforcement officers (bailiffs) would then handle the physical eviction, if necessary.
6. Security Deposit
If the new buyer takes over the property, they should also take over the tenant's **security deposit** from the previous landlord. This deposit will be returned to the tenant upon vacating, provided there are no damages or breaches of the tenancy agreement.
7. Rights of the Tenant
The tenant retains the following rights even after the property is sold:
- Right to quiet enjoyment of the premises until the end of the tenancy agreement.
- Right to proper notice for termination if the new buyer wants to reclaim the property.
- Right to claim compensation if the new owner seeks to terminate the tenancy early.
Key Takeaway:
- The sale of a property does not automatically terminate a tenancy.
- The new buyer must either wait until the end of the existing tenancy or negotiate an early termination with the tenant.
- Proper notice and compensation may be required if the new buyer wants vacant possession before the lease expires.
- Legal action (like obtaining a writ of possession) may be necessary if the tenant refuses to vacate after proper notice is given.
If this situation applies to you, it’s advisable to review the tenancy agreement and possibly consult a lawyer to ensure that all legal requirements are met when dealing with tenant rights and property sales in Malaysia.
Are there any case laws to support the above?
Yes, in Malaysia, there are several case laws that help establish the legal framework for how tenancy agreements are treated when a property is sold to a new buyer. These cases emphasize the principles of continuity in tenancy and the landlord’s obligations, as well as tenant rights when property ownership changes.
Here are some key case laws related to tenancy and transfer of property:
1. Ngeoh Soon Sang v. Tan Kim Seng & Sons Realty Sdn Bhd (1981) 1 MLJ 224
This case establishes that a tenancy agreement binds subsequent purchasers of the property. The court held that the new owner of the property is subject to the rights and obligations of the existing tenancy agreement and cannot arbitrarily demand vacant possession.
- Key Principle: When a property is sold, the tenancy agreement remains in effect, and the new owner steps into the shoes of the previous landlord.
2. Low Lee Lian v. Ban Hin Lee Bank Bhd (1997) 1 MLJ 77
In this case, the court ruled that a tenant’s right to quiet enjoyment must be respected even if the property is sold to a new owner. The new owner cannot interfere with the tenant’s rights during the term of the lease.
- Key Principle: The tenant’s right to quiet enjoyment of the premises continues unless the tenancy is lawfully terminated according to the terms of the agreement or by giving sufficient notice.
3. United Malayan Banking Corp Bhd v. Pemungut Hasil Tanah Kota Tinggi (1988) 1 MLJ 162
This case involved the sale of property with an existing tenant. The court reiterated that the tenancy agreement is not automatically terminated upon the sale of the property. The new owner must honor the terms of the existing tenancy unless legally terminated.
- Key Principle: The sale of property does not give the new owner the right to immediate vacant possession. The tenancy remains valid, and the new owner must abide by its terms.
4. Fock Hing Pang v. Lee Wah (1956) 1 MLJ 134
This case highlights the importance of proper notice in terminating a tenancy. The court held that failure to provide proper notice to the tenant would result in the tenant retaining possession until the notice period is correctly followed.
- Key Principle: When the new buyer wishes to terminate the tenancy, they must follow the notice requirements outlined in the agreement or the law, failing which the tenant can continue to occupy the property.
5. Cheong Fook Chee & Ors v. Chin Kiat Seng (1986) 2 MLJ 286
This case provides guidance on the tenant’s rights to remain in the property during the lease term, regardless of changes in property ownership. It underscores that the tenant cannot be evicted unless due process is followed.
- Key Principle: The tenant has the right to remain on the property for the duration of the lease term unless there is a valid legal reason or agreement for early termination.
6. Tengku Nik Maimunah v. Dr Tengku Mahmood Mansor (1990) 1 CLJ 285
This case reinforces the concept that a new buyer takes over the responsibilities of the previous landlord and is bound by the existing tenancy agreement.
- Key Principle: A purchaser who buys property with a tenant in occupation must respect the tenant’s rights under the tenancy agreement, including the duration of the lease and notice periods.
Summary of Legal Principles from Case Law:
1. Tenancy Continues: The tenancy agreement is binding on the new owner (purchaser) of the property. The tenant retains the right to occupy the premises until the lease expires or is lawfully terminated.
2. Right to Quiet Enjoyment: The tenant’s right to quiet enjoyment of the property must be respected even after the sale of the property.
3. Proper Notice: The new owner must provide proper notice to the tenant as stipulated in the tenancy agreement or according to statutory requirements before they can demand vacant possession.
4. Legal Remedies for Breach: If the new owner attempts to evict the tenant without following the legal procedure, the tenant can take legal action to enforce their rights.
These cases collectively support the tenant's rights when a rented house is sold, emphasizing the need for proper notice, adherence to the terms of the existing tenancy agreement, and respecting the tenant’s right to quiet enjoyment. If you are facing such a situation, these cases provide a strong legal foundation to protect your tenancy rights in Malaysia.
Ref:
ChatGPT 16 Oct, 2024.