Cyprus Legislation | Purchasing Property
5 years January 3, 2018
Cyprus Statutory Tenancy: Guarantee Rights & Validity
The liability of a guarantor in a legitimate Cyprus tenancy agreement depends on the contents of the guarantee and the terms of the tenancy agreement. Where the duration of the tenancy is stated and can be renewed for a further period, the guarantee is extended and covers the renewal.
Thereafter, provided the tenant remains in possession of the property, which is situated in a rent control area and was completed prior to 2001, the tenant becomes statutory and the statutory tenancy is not covered by the guarantee. In such cases, the terms of the tenancy agreement apply in the statutory tenancy, except those referring to the duration of the tenancy and rental amounts owed.
The law in Cyprus protects the statutory tenant to remain in possession of the premises as long as he pays the rent and complies with the terms of the tenancy agreement.
The tenant can only be evicted under the provisions of Rent Control Legislation under the following circumstances:
- Where there is a guarantee for the payment of the rent until the delivery of the possession of the property to the landlord which is valid until the expiration of the contractual tenancy.
- Where the tenancy agreement states the tenancy period or its renewal, the guarantee is limited until the expiring of the renewal (with the exception of automatic renewal).
The issue of the guarantee in statutory tenancies was examined by the Cyprus President of the Rent Control Court in a judgment issued on October 2017, where the relevant case law was analysed, which found that due to the creation of statutory tenancy, the guarantor couldn’t be found liable. This was because the landlord claimed repossession of the premises from the statutory tenants company and the rent in arrears both from the company and its guarantor. The tenancy agreement provided for a tenancy period of 24 months; there was a clause for its automatic renewal for another 12 months if neither party gave the other a written notice before the contract’s expiration.
After the expiration of the two year time frame, the tenancy was renewed automatically for another year as no notice was sent. After the lapse of the third year, the tenant became statutory and remained in possession of the premises. The guarantor, in accordance with the terms of the tenancy contract, agreed to carry out punctual payment of the outstanding rent to the landlord.
The court, analysing the legal aspect of the guarantee, stated that in the particular case, both the likelihood of the contractual tenancy renewal and the period of the renewal to be in the contemplation of the guarantor when he gave the guarantee. The Cyprus court referred to the relevant case law, whereby in a previous ruling, a tenancy agreement had a concluded at a time that was the expiration of the given renewal period rather than the original tenancy period.
The extension of the tenancy for a further period did not create a new agreement releasing the guarantor from his obligations. The Rent Control Court added that the obligation the guarantor assumed until delivery of possession of the premises to the landlord refers to the delivery of possession as per the terms of the tenancy agreement.
The guarantor’s liability ends when the tenant becomes statutory except where the tenancy agreement provides for an automatic renewal of a permanent contractual tenancy. The statutory tenant’s protection to remain in possession depends on the law and the commencement of the statutory tenancy.
Subsequently, in the given scenario, the court removed the guarantor from being liable due to it not existing when the renewal period expired and therefore he was not responsible for the payment of the rents due to the landlord.
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