CAYMAN ISLANDS Law and Practice Contributed by: Adam Johnson, Appleby
size of their demised premises, or the landlord will separately meter each premises. 6.11 Payment of Property Taxes Stamp duty (see 6.7 Payment of VAT ) and any regis - tration fees (nominal) are typically paid by the tenant at the start of the lease. There are no ongoing real estate taxes relating to rental property, save in the case of short-term holiday rentals which attract a tourism accommodation tax of 13% of the gross room rate and which is payable by the accommodation operator (albeit customarily passed onto the guest). 6.12 Insurance Issues Typically, the landlord will be responsible for insur - ing the building and common parts (passing costs on to tenants through rent or common area charges), while the tenant insures the demised premises. Typi - cal insured risks would include fire, earthquake, hur - ricane, flood and civil commotion. 6.13 Restrictions on the Use of Real Estate It is usual for a landlord to restrict the use of the demised premises and common areas. Planning per - missions and zoning constraints would also apply. 6.14 Tenant’s Ability to Alter and Improve Real Estate A lease will ordinarily prohibit the tenant from making alterations or improvements to the real estate without the prior consent of the landlord. 6.15 Specific Regulations There are no specific regulations and/or laws that apply to leases of particular categories of real estate. All leases are primarily governed by the Registered Land Act (Revised) and the Registered Land Rules (Revised). Parties generally have the freedom to con - tract as they wish, although the Registered Land Act does imply certain covenants on the landlord and ten - ant, unless modified in the lease (see 6.3 Regulation of Rents or Lease Terms ). 6.16 Effect of the Tenant’s Insolvency The terms of the lease usually allow a landlord to ter - minate the lease if the tenant becomes insolvent. Sub - ject to any provisions to the contrary in the lease, the Registered Land Act (Revised) also provides landlords
with the right to forfeit the lease if a tenant is adjudi - cated bankrupt (if an individual) or goes into liquida - tion (if a company). 6.17 Right to Occupy After Termination or Expiry of a Lease Unless expressly provided for in the lease, tenants do not have security of occupation or a right to renew at the end of the term. However, a tenant that continues to occupy the premises with the consent of the land - lord after the termination of the lease will be deemed to be a tenant holding the premises on a periodic ten - ancy on the same conditions as those of the expired lease, insofar as those conditions are appropriate to a periodic tenancy. 6.18 Right to Assign a Leasehold Interest The Registered Land Act (Revised) implies a cove - nant on the tenant preventing alienation without the landlord’s consent (which is not to be unreasonably withheld). A landlord would typically impose a more stringent covenant in a well-drafted lease (for exam - ple, setting out specific circumstances in which it is prepared to permit assignment, subletting or sharing, and reserving to itself absolute discretion to refuse outside of those circumstances), and a tenant would typically look for more flexibility. It is therefore a point that is often the subject of some negotiation, but a well-advised landlord would look for at least some assurances on the financial stand - ing and commercial reputation of the incoming tenant in order to protect its interest in the remainder of the estate. 6.19 Right to Terminate a Lease Typically, a lease would provide for the landlord to terminate in the event of a material breach by the tenant (subject to any negotiated cure periods) or an insolvency event of the tenant. Either the landlord or the tenant would ordinarily be given the right to ter - minate the lease if the leased premises are substan - tially destroyed or damaged and not repaired within a specified period. Tenant break options are generally uncommon, but could be negotiated.
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