The landlord who rents his immovable property to a company runs the risk of nonpayment of rent which may accumulate until he succeeds to recover its possession. This is a very serious issue and goes beyond the loss of rent due, since the landlord suffers inconvenience, costs and damages to the property.
Securing the payment of the rents with a trusted guarantor is a reasonable claim of the landlord which should be included in the tenancy agreement and he must also ensure that terms are included to prevent the tenant alienating the ownership of the company through the disposal of shares or even its deletion from the records of the Registrar of Companies. One may use the status of a company as a legal entity to take advantage of the landlord.
There are companies which use as a registered office a closed apartment or office or even an abandoned house or an open space. Therefore, the tenancy agreement should include a provision that service of notices, applications or actions to the company as tenant can be made to the rented property and when it is closed through affixation on the door.
If rents are paid through a cheque issued by a person other than the company tenant, the landlord should be careful to issue a receipt with the right content to prevent such a person from claiming he is the tenant and not the company.
The judgment of the Supreme Court issued on 24.8.2017 in two applications for a certiorari order gives an indication of the above, where the court, analysing the relevant case law, did not allow the annulment of the writ of possession for the property in question and did not prohibit its execution against the applicants who claimed they were subtenants of the company, which was a statutory tenant.
The company owed the landlord over €190,000 in unpaid rent dating from 2012. The applicants claimed that the eviction order had been issued against the company whereas, when it was drafted, it included its directors and/or officials and/or authorised representatives, that it was not served to them personally, as well as that the court of first instance had no jurisdiction to issue the said order due to the landlord’s allegation that the applicants were trespassers.
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 said persons.
As regards their complaint for non-personal service, the court held that the applicants disregarded the fact that according to the bailiff’s affidavit, the order was served to the persons responsible for the place where the company tenant carries out its business, and if the said declaration is not valid, it was up to the company to question it and not to them.
Regarding the claim that the court of first instance had no jurisdiction 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.
Lastly, as regards the applicants’ claim that the order was a product of fraud committed by the landlord, the Supreme Court held that the procedure for the issue of a certiorari order – as the one claimed by the applicants – seeks 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 another procedure and it therefore dismissed the application.