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Insufficient protection of landlord against rent default

law books

The law does not provide a mechanism for the collection of rent deposited with the court

 

The owners of properties subject to the rent control law are not sufficiently protected, since they are not allowed to collect the amount of rent due without a final judgement. While a tenant is given the right to deposit the rent claimed to be owed in court so that they can file a reply, no mechanism was provided for in the amending Law 3(I)/2020 for the landlord to collect it.

The tenant, after service of the eviction application to them, has three options so that they may be heard: to pay the rent in arrear to the landlord, deposit it in a banking institution for the benefit of the landlord or deposit it with the accounting department of the court. Upon presentation of the relevant receipt, the registrar of the court will accept the tenant’s reply, who will be entitled to state his allegations and be heard.

When the tenant used the third option, the payment is not made for the benefit of the landlord, but for the purpose of enabling the tenant to file a reply. The landlord must wait until the case is tried and depending on the outcome, the court may issue a judgment ordering the payment to the landlord. The landlord has no other remedy regardless of whether the tenant pays rent or not up until the judgment is issued.

The issue was raised in a judgment issued by the rent control court on May 31 in the context of examining a landlord’s application for the collection of the amount of €40,000 that their tenant deposited with the court as a condition to be allowed to file a reply.

The court asked both landlord and tenant to state their views as to whether the landlord had a right to collect the amount. The issue was considered by the court as novel as there was no previous guiding case law. After quoting the relevant legislation, the court pointed out that the amendment of the law came at a time when the phenomenon of unjustified non-payment of rents was quite worrying, to the extent that it constituted a socio-economic problem by causing instability in the rental market and the local economy in general. The amendment of the law is necessary to provide protection to the landlord as well.

The court emphasised that it was an attempt of the legislator to entertain the concerns of the social group of property owners, who were facing the phenomenon of late payment of rents. Landlords were forced into legal proceedings, resulting in delay in collection of the amounts owed to them), and at the end of the day, in most cases, it was found the tenants had no substantial defence. By amending law, conditions were set for the tenant to be allowed to file a reply in cases of eviction applications, where the landlord claims eviction is due to non-payment of rent.

The court concluded that the intention of the legislator was to provide three options to the party wishing to file a reply to a rent control application based on article 11(1)(a). The choice was left to the tenant and the legislation has not further regulated the deposit of the sums in the accounting department of the court. Nor does subsection (ii) of article 11(1)(a) create a right to the landlord to automatically collect the deposited amount. No reference is made in the law to pay the deposited amount to the landlord. The amount of the deposit remains in the possession of the accounting department to ensure the execution of the court’s decision and in this way the rights of both parties are protected.

 

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

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