A TENANCY relation may come to an end due to unforeseen circumstances making the premises unsuitable for use for the purpose they were rented, having been destroyed by reason not attributable either to the tenant or the landlord. The cause may be force majeure, fire or any other catastrophic event which frustrates the tenancy agreement. In such a case, the parties are discharged from their respective contractual obligations; the tenant is not entitled to claim from the landlord for repairs to the premises and the landlord cannot claim rent from the tenant. As long as the possession and the use of the premises was lost and reverted to the landlord, the tenant does not have any right and his respective obligation to pay rent ceases.
Frustration is distinguished from unsuitability of the premises due to laden defects, such as a watertight roof or normal wear and tear, constituting a hazard to the life of the occupant or neighbour. In this case, the issue is regulated by the terms of the written tenancy agreement which define the rights and the obligations of the parties. In the absence of such a regulation or of a tenancy agreement and provided the tenancy is statutory, the matter is regulated by the Rent Control Law. The landlord has an obligation to repair and maintain the premises and if he omits to do so, an actionable right is created in favour of the tenant for damages based on the costs for restoring the premises to their previous condition. The only right which the law provides to the statutory tenant is to claim damages for any costs incurred from executing repairs or maintenance to the premises, which should have been executed by the landlord. The tenant, as long as he retains possession of the premises, is not allowed to withhold the payment of the rent or to set off his losses with the rent.
According to the judgement issued by the Rent Control Court dated 23.1.2019, where there was an intervention to the fundamental right of a statutory tenant to possession of the premises, his rights are remedied through temporary judicial protection (interim order) or through termination of the tenancy relation. The tenant has to make a choice either to insist in the tenancy agreement and comply with his obligations (by paying the rent) and claim his restitution for the costs incurred for the repairs, or to terminate the tenancy agreement and claim damages for the loss of his right to possession. The court concluded that when the premises are found to be unsuitable for use, this does not give the right to the tenant to keep possession of the premises, depriving it from the landlord without paying rent.
Referring to the doctrine of frustration raised by the tenant, the court observed that it applies strictly and not to release the parties from bad agreements. The frustration of an agreement is justified in the event it becomes impossible to execute. The reason causing the frustration should be an external change of circumstances. To establish frustration, the contractual obligation must have become impossible to execute due to circumstances which have essentially changed the obligation undertaken by the party invoking it. The court added that the doctrine of frustration in leases of immovable property can be applied in very exceptional cases. In the particular case, the tenant retained possession of listed premises, claiming they were unsuitable for use for the purpose he rented them, as a restaurant, without paying rent. He invoked the doctrine of frustration; however, the court rejected his allegations due to the fact that if the circumstances were such that frustration could have been applied, the tenant shouldn’t have remained in possession of the premises.
George Coucounis is a lawyer specialising in the Immovable Property Law, based in Larnaca, Tel: 24 818288, [email protected], www.coucounislaw.com