The landlord who rents his immovable property to a company runs the risk of non payment of rental amounts owed which typically accumulate until appropriate remedial action is taken to recover its possession. This is a very serious issue in Cyprus and goes beyond the loss of rent due, since the landlord suffers inconvenience, costs and sometimes even damage to the property if the company is more than a mere office space.
Securing the payment a rental agreement with a trusted guarantor is a landlords reasonable entitlement, which should be included as per the terms of any standard tenancy agreement. With a company however, the landlord must also ensure that terms are included to prevent the company tenant segregating the ownership of the company through shares or even through its deletion from the Registrar of Companies and its subsequent records. Landlords must proceed with caution when using company tenants as using the status of a company as a legal entity is a somewhat common occurrence in Cyprus.
There have been recent occurrences in Cyprus whereby companies use premises such as a closed apartment, office building, or even an abandoned open space or house as a registered office. Therefore all tenancy agreements drawn up should include provisions purporting to the serving of notices, applications or actions to the company tenant which can be delivered or dropped off even when the company is closed.
If rents are paid through a cheque issued by a person other than the company tenant, the landlord should only issue a receipt when he is sure he is dealing with an official representative to prevent any third party employees claiming they are the tenant and not the company.
In once case, a Cyprus company owed their landlord over €190,000 in unpaid rent dating back to 2012. The applicants claimed that the eviction order had been issued against the company whereas, when it was drafted included the following company roles:
- or Authorised Representatives.
The company still claimed that letters requesting rental payment and subsequent eviction notices were not served to them personally, additionally, the court of first instance had no leverage to issue the order due to the landlord’s claim that the company were trespassing on his land.
The Supreme Court did not accept the applicants’ allegations stating that they overlooked the fact that the order issued was in accordance with the landlord’s claim as expressly stated in his eviction application and included the above roles.
Regarding the claim that the court of first instance had no leverage to issue the order in question on the basis of the landlord’s letter stating that the applicants were trespassers, the Supreme Court added that it is sufficient to observe that the litigants before the court of first instance were the parties to the tenancy agreement and that the said order was lawfully issued on the basis of the facts placed before it.
Finally, as regards to the applicants’ claim that the order was a product of fraud committed by the landlord, the Supreme Court held that it was the applicants prerogative to ascertain the lawfulness of a court judgment and not whether it was issued based on fraud, something which can be examined in the context of previous case ruling and the court ultimately dismissed the application.
Do you require legal assistance for any rental or commercial litigation disputes in Cyprus? We have local experts that can help you. Contact us for more information.