CAYMAN ISLANDS Law and Practice Contributed by: Norman Klein and Adam Johnson, Appleby
• where the lease is of furnished premises, to keep the furniture in as good a condition as it was at the commencement of the period, fair wear and tear only excepted, and to replace such articles as are lost, destroyed or so damaged as to be beyond repair with articles of equal value to those so lost, destroyed or damaged; • to permit the landlord or their agent, with or without workers or others, at all convenient times and after reasonable notice, to enter the leased premises and examine their condition; • to repair or otherwise make good any defect or breach of agreement for which the tenant is responsible and of which notice has been given by the landlord to the tenant, within such reasonable period as may be specified in the notice; and • not to transfer, charge, sublease or otherwise part with the possession of the leased prem - ises or any part thereof without the previous written consent of the landlord (such consent shall not be unreasonable withheld). With the exception of a temporary domestic lockdown period, the Cayman Islands govern - ment did not take any action to enact legislation to specifically regulate lease terms as a result of the COVID-19 pandemic. 6.4 Typical Terms of a Lease Because of the stamp duty treatment on the grant of longer leases (see 6.7 Payment of VAT ), a lease term of five years (or less) is relatively common, and may include an option for the par - ties to renew for one or two further terms. Responsibility for repairing the demised prem - ises is typically assigned to the tenant. The land - lord is usually under an obligation to insure and maintain the building and the common parts, and will usually recoup these costs from the ten -
ant through rental payments or common area maintenance charges. Although always subject to agreement between the parties, rent is commonly paid monthly or quarterly in advance or arrears. Following the outbreak of the COVID-19 pan - demic, parties are advised to pay close attention to force majeure and rent abatement provisions. 6.5 Rent Variation It is typical for commercial leases to make provi - sions for rent to be reviewed. 6.6 Determination of New Rent Typically, rent is reviewed in line with the con - sumer price index (CPI), by a fixed percentage or by market review. 6.7 Payment of VAT No VAT is payable on rent, although stamp duty is payable on the lease. Stamp duty is usually paid by the tenant and is calculated at the following ad valorem rates: • if the term exceeds 30 years, 7.5% of the full market value of the leasehold interest in the real property; or • if the term is 30 years or less: (a) where any premium or valuable consid - eration other than or in addition to rent us provided, 7.5% of the amount of the premium; and (b) where the consideration or any part of the consideration is rent: (i) if the term is less than one year, 5% of the aggregate rent; (ii) if the term is between one and five
years, 5% of the average annual rent or of market rent, whichever is
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