No Retail Tenancy Act in Malaysia – A Few Common Problems Face By Complex Management On Commercial Retail Tenancy

Q1. What is can be deemed to be Commercial Retail Tenancy (“CRT”)?

Answer: 

It is a tenancy entered into for business/commercial purposes i.e. for the purpose of retailing, either products or service or both. Mostly it is applicable for shopping complex tenancy whereby the landlord will be structured as commercial entity, renting out the premise to collect rental substantially on retail business.

Q2. What are the unique features on CRT as compare to other tenancy?

Answer: 

The tenants will have an absolute possession of the lot in certain sense. Some will be subjected to house rules, operation hours etc. The landlord in CRT usually provides additional service such as security, promotional or air-condition. CRT normally subjected to complex and house rules to ensure uniformity of tenancy terms amongst all tenants.

Q3. Does CRT allow for sub-letting?

Answer: 

Normally no. The Commercial Retail Tenancy Agreement (“CRTA”) usually expressed that the CRT is not allowed for sub-letting. The reason is because the landlord for CRT survives at rental, and any appreciation of rental will be the landlord’s sole consideration.

If the tenant in a CRT is allowed to sublet the demised premise, that will create inherent difficulties for the Landlord such as: –

a. Subletting will create direct competition with the landlord such as the value of the rentals;

b. It would be difficult for the landlord to control the tenant and its sub-tenants because the Landlord would not be a privy to the Agreement between the tenant and its sub-tenant;

c. There will be two (2) sets of tenancy terms for a single demised premise, which CRT’s landlord is trying to avoid;

d. Difficulty to promote the commercial retail tenancy premises such as cannot control the operation hours, cannot impose house or complex rules.

Q4. Is there any specific Law governing CRT in Malaysia?

Answer: 

No. There is no specific Law governing CRT in Malaysia.

Q5. If there is no specific law in term of Retail Tenancy Act in Malaysia, what law regulate the CRT?

Answer: 

There is no specific statutes and no codification for Retail Tenancy in Malaysia. Most of the CRT in Malaysia is governed by general contract law such as Contracts Act 1950 which would cover the conflicts arise from the CRT. Other than that, the issues raised and/or related to CRT also governed under:-

i) Specific Relief Act 1950 – prohibits a landlord evicting the tenant without a Court’s order;
ii) Distress Act 1951 – covering matters of eviction;
iii) Courts of Judicature Act 1964;
iv) Rules of Court 2012 – covering matters when the rental is disputed;
v) Civil Law Act 1956 – covering on payment disputes and double rental claim; and
vi) Judicial and precedent cases – a framework and precedent which would cover on rental disputes.

Q6. What are the common problems faced by the landlords and the tenants of the commercial retail lots in Malaysia?

Answer: 

The most common problems faced by the landlords and tenants under CRTA are mostly on the outstanding rental and possession of the premise.

Other than that, the landlords and tenants may also face the issue on the claims for the unexpired terms in the event there is an early termination and/or unlawful termination of the CRTA. The termination of the CRTA is also one of the common problems faced by the landlords and tenants on the basis whether the CRTA is lawfully terminated or not.

The compulsory renovation as well as the issue of the relocation of the demised premise are also common problems faced by the landlords and tenants.

Q7. Is the landlord allowed to relocate the tenant’s retail lot?

Answer: 

Normally yes. Notwithstanding the CRTA stated the location of the retail lot, however it may be subject to change as the CRTA often reserve the unilateral right for the landlord to relocate the tenant’s retail lot to another part of the complex.

Q8. Whether the tenant needs to get the landlord’s consent and approval for the renovation of the retail lot?

Answer: 

Yes, subject to the CRTA. Usually, the tenant is not allowed to alter and/or renovate the exterior or interior of the demised premise without the consent and approval by the landlord. The tenant is supposed to yield up the demised premise with all fixtures and fittings belonging to the landlord upon the determination of the tenancy in good and tenantable repair and condition, fair wear and tear excepted. The tenant shall make good at their own expense any damage caused to the demised premises or fixtures and fittings therein as a result of the tenant’s act or neglect.

Q9. Can the tenants be fined for late opening and non-operation of the premise under CRTA?

Answer: 

Subject to the CRTA, the tenants can be fined for late opening and non-operation of the premise because the tenants are bound by the CRTA and regulations set by the complex management as the landlord. Hence, if the tenants failed to follow the regulations, they might be fined to pay for damages as it constitutes a breach under the CRTA.

FOOTNOTES 

[1] https://www.bnm.gov.my/index.php?ch=en_press&pg=en_press&ac=5018&lang=en

[2], [3], [4], [5], [6], [7], [8], [9], [10], [11], [12] https://www.bnm.gov.my/index.php?rp=en_faqcovid19loan

[13] https://www.bnm.gov.my/index.php?rp=en_faqcovid19loansupp

[14]https://www1.treasury.gov.my/index.php/galeri-aktiviti/siaran-media/item/6285-siaran-media-tiada-caj-tambahan-atas-bayaran-ansuran-perjanjian-sewa-beli-konvensional-dan-shariah.html

[15] https://www.bnm.gov.my/index.php?rp=en_faqcovid19loansupp

THIS FAQS ARE PREPARED AND PUBLISHED BY MESSRS GAN & ZUL, ADVOCATES & SOLICITORS, KUALA LUMPUR.-GENERAL DISPUTE RESOLUTION AND APPELLATE DIVISION-