The law of equity and trust intervenes and protects the tenant
When the underground space of a building, intended to be communal parking space, is rented out to be used as storage, a statutory tenancy may be created, which will constitute an obstacle for the owner to issue separate title deeds of the other units. The owner’s genuine intention to fulfil their legal and contractual obligations, legalising the underground space may not be enough to meet the provisions set out in the Rent Control Law for the eviction of the statutory tenant.
The issue is quite serious, since it affects the owners of immovable property completed and/or offered for rent prior to 31.12.1999 and situated within an area controlled by the Rent Control Law protecting the statutory tenancy and status of the tenant. The owner’s argument of having a contractual obligation towards the purchasers of the other units in the building to issue the separate title deeds and transfer the properties to them is contrary to the legal principle that the new owner of an immovable property possessed by a tenant is bound to fulfil the obligations of the previous owner.
The law of equity and trust intervenes and protects the tenant, recognising the existence of the tenancy and that it has become statutory.
The issue was examined by the Rent Control Court of Limassol when an owner claimed re-possession of part of the underground parking space of a building rented to a tenant who became statutory and used it as a warehouse for his rented shop in the building.
In particular, the owner was claiming recovery of possession of the demised underground space in order to comply with the terms of the town planning permit, specifying the use of the underground space as communal parking space, to secure the certificate of final approval of the whole building, issue the separate title deeds and transfer them to the purchasers of the units.
The court, following the above legal principle, decided that the owner invoking the rights of the purchaser, who was a third person and acquired rights over the building after the signing of the tenancy agreement, couldn’t help his case. According to this principle, the purchaser has an obligation as trustee to comply with the obligations of the owner towards the tenant in relation to their right to possess and enjoy the demised property.
In examining the owner’s argument that he was claiming re-possession for his own use, the court referred to the provisions of the Rent Control Law which give the owner the right to claim re-possession of a premises in order to use it for their existing or future business.
The law refers to the establishment of the business activities of the owner on the premises and, in the present case, it derived from the evidence that the owner had no intention to use the demised premises himself. The property itself did not house the business of the owner and he had no intention of carrying out business therein. As a result, the court found that the provision set out in the law for a genuine, reasonable and immediate need to recover possession of the property was not met.
The court also examined the owner’s argument that he did not have to carry out a search to find similar premises in the area to establish his business, since the only premises satisfying his needs was the underground space. However, the court stated that the owner was claiming re-possession of the premises not to establish his business, but to serve the needs of another person (the purchaser) and consequently, the provisions of the law were not satisfied. Following the above, the court decided that the demised underground space used as a warehouse by a statutory tenant was not reasonably claimed by the owner and therefore, his claim failed.
George Coucounis is a lawyer practicing in Larnaca and the founder of GEORGE COUCOUNIS LLC, Advocates & Legal Consultants, www.coucounis.law, [email protected]