Rights when a rental agreement expires

A property owner who notifies a tenant when their rental agreement expires that they do not intend to renew it and calls on the tenant to surrender the property, is likely to face refusal and non-payment of the rent as mesne profits. Taking advantage of having possession of the property until the trial of the landlord’s lawsuit for its recovery, the former tenant seizes the property and does not pay any amount.

The owner’s loss in such cases can be large and increase month by month, creating an unbearable situation for them, especially if they have obligations, rely on the income as rent or the former tenant is not a creditworthy person.

The landlord has the option of submitting an application for interlocutory relief, seeking an interim order against the former tenant for payment of the amount of rent as mesne profits, for as long as they retain possession of the property and pending trial of the lawsuit. The owner can base their application on Article 32 of the Courts Law, L.14/1960 and on Article 4 of the Civil Procedure Law, Cap.6.

The landlord has no other remedy available due to the nature of their actionable right in the lawsuit seeking an injunction ordering the former tenant to surrender the property, plus rent as mesne profits or compensation for loss of use. Attempting to secure an interim order will not succeed, since the court is not permitted at the initial pre-trial stage to enter into the merits of the dispute nor to grant a final remedy. Also, in the case of an application for summary judgment, depending on the former tenant’s position, again the court will not grant the landlord a final remedy, without giving the former tenant the right to be heard.

The District Court of Paphos in its decision issued on August 28 examined such an issue. The lawsuit was brought by a property owner claiming that the rental agreement had expired and requesting an order for recovery of their property, as well as €2000 per month, provided for in the agreement, as mesne profits until the delivery of possession.

After his application for summary judgment was dismissed, the owner filed an application against the former tenant being in possession of the property and requested an interim order for payment of the amount the tenant was paying as rent, without accepting that this amount is rent or is the due amount, until the trial of the action.

According to the owner’s allegations, the former tenant – a company – had stopped paying any sum and had accumulated a debt of €48,000, increasing monthly, while being insolvent.

The court examined the application for an interim order, finding that the owner had disclosed a debatable issue which could and should be tried to reveal the full factual dimension. It concerned his right, as the registered owner of the property, to take possession after expiry of the tenancy agreement entered into with the company. His allegations were specific, based on documents, and there was nothing that preliminarily prevented the court from examining the action.

The court was satisfied that the first three conditions of Article 32 of Law 14/60 were met, adding that it shared the owner’s position that, if the requested order was not issued against the company, in the form of interim remedy, it would be difficult or impossible to do full justice at a later stage.

The court held that since the company was in possession of the property while the lawsuit was pending and there was a willingness to pay for its possession, it did not follow that the issuance of the requested order would cause damage to the company, while it would prevent the owner’s loss and the company benefitting from possessing the property free of cost. For this reason, it issued the interim order ordering the company to pay the amount of the rent per month to the owner while it retains possession of the property or until the trial of the lawsuit.

George Coucounis is a lawyer practicing in Larnaca and the founder of GEORGE COUCOUNIS LLC, Advocates & Legal Consultants, www.coucounis.law, coucounis.law@cytanet.com.cy