Rights Of A Landlord If A Tenant Is Not Paying Rent In Malaysia
One of the biggest nightmare for a landlord is when the tenant defaults on rent. Unfortunately, this is a common scenario many landlords have encountered, and as of now, there is no specific legislation that regulates tenancies in Malaysia. In the event that your tenant has delayed or refused to pay rent, here are some options you should consider for your next course of action.
Your first line of defence: The tenancy agreement
While it is not compulsory under the law, it is always advisable to have a tenancy agreement to safeguard the interests of the landlord and the tenant. A tenancy agreement would normally outline the rights and duties of each party during the tenancy period, and should also incorporate other important terms such as the rental amount and the recourse for default in payment. Therefore, both parties should be fully aware of their respective responsibilities upon signing the agreement.
If a tenant defaults in rent payment, this breaches the tenancy agreement, and the landlord can initiate a civil proceeding to enforce the remedies stated in the agreement against the tenant. Since the terms and conditions exist based on the parties’ mutual agreement, the tenancy agreement is the primary document to refer to whenever a dispute arises.
Therefore, during the negotiation stage, you should seek legal assistance to ensure that your tenancy agreement is drafted in a manner that accurately reflects your wishes and intentions regarding the issue of rent, for instance, you can introduce a provision that gives you the right to terminate the agreement if the rental is not paid in a fixed time frame or charge interest for late payment of rent.
Monetary relief: Distress Action
In situations where tenants refuse to pay rent, many landlords would want to get their money back to recuperate their financial losses, and they can do so by applying ex-parte (unilaterally apply) for a warrant of distress from the court. The warrant allows a landlord to recover the amount of rental owed by the tenant for a period not exceeding 12 completed months of the tenancy preceding the date of the application by confiscating and seizing the tenant’s movable property to be sold off at a public auction. Do note that the tenancy will not be terminated and shall continue even after the outstanding rent is settled.
Evicting the tenant
Other than monetary compensation, one other common recourse for landlords is to re-claim their property. Some tenants simply ignore their obligation to pay rent, ignore the landlord’s pleas and refuse to vacate the premises. However, the law is not very helpful to landlords in these scenarios. Even though the property ultimately belongs to the landlord, according to Section 7(2) of the Specific Relief Act 1950, a landlord is prohibited from recovering possession of the property without a proper court order. You may think that as a landlord, you are entitled to do anything you want to your property, but in reality, you do not have the right to evict the tenant without first obtaining a court order, and if you enter the premises by force, your tenant could sue you for trespassing.
The landlord has to engage a lawyer to terminate the tenancy agreement before applying for the eviction order. Upon receiving the order, the landlord can subsequently lodge a police report, enter the premises using necessary force in the presence of a police officer, inform the tenant of the eviction, and then recover possession of the property. Evicting tenants in this way can be harsh and should be a last resort for when the tenants are problematic or uncooperative.
Letter of demand
If a landlord chooses to pursue legal actions for overdue rental payments, the tenant must be properly and sufficiently notified beforehand. The landlord should issue a letter of demand, which is essentially a formal warning letter to inform the tenant that the landlord may commence legal proceedings against the tenant to recover the default rental should it remains unpaid by a certain date. Many tenants only realise the severity of the situation at this point.
If the tenant finally complies and pays the rent due, a letter of demand can prove to be a straightforward and cost-effective method to protect the interests of the landlord and avoid potential litigation. It is prudent to have a lawyer assist you in preparing your letter of demand as this ensures that your letter clearly captures your claim and intent. If the tenant still declines to pay up, the letter of demand can be used in court as evidence of the outstanding rent and that the landlord has exercised reasonable steps to recover that amount.
But first, establish good communication
It is frustrating when a tenant is not paying rent. You may be wondering if you could just cut off the utilities supply or change the locks of the premises. After all, it seems justifiable to do so when you rightfully own the property. Depending on the given situation, these actions can be a sensitive matter bordering on the infringement of rights.
Therefore the sensible thing is to seek legal advice before taking matters into your own hands. Nevertheless, do keep in mind that the law favours the tenant. Resorting to legal actions is a drastic measure that puts a damper on the landlord-tenant relationship, and you may have to endure lengthy court procedures that takes a toll on the wallet.
Try to talk to your tenant first to request for the outstanding rent, and if possible, sort out a revised payment structure. If the tenant continues to default in payment or fails to be civilised with you, always check your tenancy agreement to determine your rights as a landlord, and always seek legal assistance to decide on the best way to protect your interests.
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