19 March 2019

Some common issues faced by landlords and tenants


Alex Toh
Senior Associate | Singapore

It is the last month of tenancy – can the Tenant request that the Landlord deduct the rent from the Security Deposit?

It is a common request that the Landlord may receive towards the end of the tenancy. The Landlord must bear in mind that there are a variety of reasons for the collection of the Security Deposit. Besides ensuring that the Landlord has some recourse in the event that the Tenant vanishes without paying rent, the Security Deposit may also be used by the Landlord to carry out any repair or rectification works to the Property in the event that the Tenant damages anything which belongs to the Landlord. Therefore, if the Landlord agrees to the Tenant’s request to skip the payment for the last month(s), the Landlord bears the risk of financial loss should the Tenant refuse to repair or replace any of the Landlord’s fittings on the Property that is damaged and the cost incurred in carrying out the repair or replacement exceeds whatever is the balance Security Deposit.

The Tenant may also think that out of convenience, the Tenant can go ahead and skip the payment for the last month(s) of the tenancy without informing or obtaining consent from the Landlord. There is usually no such provision in a standard tenancy agreement and the Landlord is usually permitted to charge late payment interest if the rent is not received by the Landlord by the stipulated timeline.

The Landlord may also exercise their rights under the tenancy agreement to terminate the tenancy and take back the Property as a result of the Tenant’s breach of the terms of the tenancy in failing to pay rent. However, there are certain prescribed legal procedures which the Landlord needs to follow before the Landlord is able to terminate the tenancy agreement. If Landlord takes action such as by changing the locks without compliance with the prescribed legal procedures or proper legal advice, the Landlord may risk running afoul of the law or breach their own obligations under the tenancy agreement. For example, if the Landlord changes the lock to the Property while the Tenant is in the Property and refuses to permit the Tenant to get out, the Tenant may sue the Landlord for false imprisonment.

What can I do if the Landlord refuses to return my Security Deposit?

At the end of the tenancy, the Tenant may find that the Landlord makes certain unreasonable demands for the Tenant to fix or repair the Landlord’s fittings to the Landlord’s satisfaction before the Landlord agrees to return the Security Deposit. The Tenant’s obligations to reinstate the Property are generally found in the Tenancy Agreement. Sometimes, the Tenancy Agreement does stipulate that the Tenant returns the Property after repainting all the walls, washing all curtains and hiring a professional cleaning service to clean up the Property. It is therefore essential for both the Landlord and the Tenant to examine their rights and obligations in the Tenancy Agreement and be clear of what has been contractually agreed before signing the Tenancy Agreement to avoid potential disputes in the future.

If both parties are unable to settle the dispute, they may wish to contemplate taking further action. One of the possible action would be for a claim to be filed with the Small Claims Tribunals at the State Courts.

The Landlord and the Tenant should however, take note that under the Small Claims Tribunals Act, the tribunals can only hear specific cases which meet all the criteria below:

1) The claim must not exceed S$10,000. The limit can be raised to S$20,000 but both the Landlord and the Tenant must agree to it and file a Memorandum of Consent. It is very unlikely for parties who are in dispute to agree to this.
2) The claim must be filed within 1 year from the date on which the dispute arose. For example for the Tenant, if the Landlord refuses to return the Security Deposit by the stipulated timeline set out in the Tenancy Agreement, the Tenant must file the claim with the Small Claims Tribunals within 1 year from that date.
3) The tenancy is relating to a lease of residential premises i.e. industrial or commercial premises are excluded.
4) The duration of the tenancy must not exceed 2 years.
5) The claim must not be relating to claims for possession of the Property.

If the claim does not fall within the jurisdiction of the Small Claims Tribunal, either party may then consider filing a claim in the Magistrate’s Courts.

Can the tenancy be terminated before the expiry of the Term?

The tenancy agreement can be terminated before its expiry even if the Landlord or the Tenant does not breach any of its obligations under the tenancy agreement.

There are usually a few ways in which this happens:-

1) Diplomatic Clause

For foreigners who are posted by their companies to work in Singapore, their employment or stay in Singapore is contingent upon being able to work in Singapore. In the event they are terminated or transferred by their employer, they may need to leave Singapore on short notice. Hence, foreigners will often ask for diplomatic clauses to be inserted into their tenancy agreement, which will allow them to terminate the tenancy agreement unilaterally without penalty upon furnishing documentary evidence of the transfer of their role out of Singapore/termination of their employment in Singapore.

2) Enbloc Clause

For private condominiums, the Landlord may wish to consider incorporating an enbloc clause into the tenancy agreements in the event that the development undergoes a successful collective sale. This will permit the Landlord to terminate the tenancy agreement unilaterally without penalty, but usually with two or three months notice given to the Tenant to vacate the Property.

3) Mutual Agreement

The Landlord and the Tenant may even be able to come to a mutual agreement for the early determination of the tenancy for their own personal reasons. They may effect this by signing a Surrender Agreement relating to the tenancy of the Property.

Alex Toh Senior Associate, Withers KhattarWong* | Singapore

Category: Article