Lease subject to the sale of a property

A condition in a lease agreement that in the event the property is sold the lease will be terminated is applicable

If a remedy is pursued in an application for an interim order which is similar to that sought in an action it is unlikely that a court will grant it, unless the facts are such that the balance of convenience justifies it. The issuance of a prohibitive order must not destroy the subject matter of an action and the court must safeguard disputed matters to be heard and decided in its final judgment, giving priority to the trial of the action.

When an action is instituted for illegal trespass on a property after the termination of the lease agreement, an interim order may be sought prohibiting the ex-tenant from entering or possessing the property so the landlord has exclusive possession. The court must weigh all factors, the terms of the lease agreement, the reason for the termination and the facts of the urgent remedy requested.

It is a basic principle of law that what is agreed upon must be fulfilled and for this reason the wording and conditions of a lease agreement are very important.

The Supreme Court in a unanimous judgement issued in a civil appeal along these lines dated May 31 set aside the judgment of the court of first instance. The plaintiff’s action was based on illegal trespass by the defendant ex-tenant on a property. He claimed exclusive possession because he sold it, that the defendant had no right over it and that the lease was terminated, plus damages.

The plaintiff also filed an application for an interim order prohibiting the defendant from entering the property, which was commercial. The lease agreement included a term that the landlord was entitled to sell the property and terminate the lease, in which case the tenant was obliged to leave.

The court of first instance dismissed the application of the landlord, who appealed. The Supreme Court held that the ground of the action was illegal trespass and breach of contract and that in the statement of claim it was stated that the property and the premises did not fall under the rent control law and that the tenant was not statutory, since in 1999 and 2000 the premises were used by the landlord.

Therefore, the finding of the court of first instance that the procedure before it was not suitable for resolving the issue of jurisdiction was wrong, especially given the principle that the jurisdiction is defined in the pleadings which determine the disputed facts. In addition, the Supreme Court held that the court of first instance did not assess that it, and not the rent control court, had jurisdiction based on the evidence before it.

Moreover, it did not consider that immediately before the commencement of the hearing, the lawyers of the litigants declared and it was approved as an fact that sale contracts for the property were signed, duly stamped and one of them deposited at the land registry. It was pointed out that this fact had potential value and the court failed to take it into account.

The Supreme Court concluded that the court of first instance did not exercise its discretion in accordance with case law. The fact that the issuance of the orders was similar with the claims in the action should not, in these circumstances, mean anything more than the orders being issued for the plaintiff as an urgent remedy. The orders, as an interim remedy, could accordingly be decided in the final judgment. Therefore, the Supreme Court ruled that the necessary conditions for the issuance of the prohibiting order were met and the balance of convenience was in favour of the plaintiff and issued the order to safeguard the rights of the landlord until the trial of the action.

George Coucounis is a lawyer practising in Larnaca and the founder of George Coucounis LLC, Advocates & Legal Consultants, [email protected]