MALAYSIA Law and Practice Contributed by: Natalie Ooi and Nicholas Ooi, Ooi & Ooi
operators do not “lease” the property in the tra - ditional sense, but operate under hotel manage - ment agreements or franchise arrangements. 6.16 Effect of the Tenant’s Insolvency Most leases or tenancies include insolvency clauses, allowing the landlord to terminate the lease in situations such as the tenant becom - ing bankrupt or insolvent, the appointment of a receiver or liquidator, or the tenant entering into a voluntary arrangement or compromise with creditors. If the landlord re-enters or terminates due to insolvency, they may claim unpaid rent up to the date of termination, damages for early termina - tion, and possession of the premises. However, landlords cannot distrain for rent (ie, seize a ten - ant’s goods) once winding-up has commenced, unless allowed by the court. 6.17 Right to Occupy After Termination or Expiry of a Lease A tenant does not have an automatic legal right to continue occupying commercial premises after the expiry or lawful termination of a lease. How - ever, certain circumstances may allow the tenant to remain temporarily, and landlords must take specific steps to avoid unintentionally creating a new tenancy or allowing a tenant to overstay. If a tenant remains in possession and the land - lord accepts rent (without objection), the NLC may consider this a monthly tenancy known as “tenancy by holding over” , which can be termi - nated by either party with sufficient notice (usu - ally one month). It is advisable for a tenancy agreement to include a clause that the tenant must vacate at the end of the term and that no holding over is allowed without written consent of the landlord, in order
to prevent the implication of a new tenancy if the tenant stays. It is also advisable to send a written notice to the tenant before lease expiry, stating that the lease will not be renewed and that the tenant is required to vacate by a specific date. The land - lord should not accept rent after the lease ends. 6.18 Right to Assign a Leasehold Interest In Malaysia, whether a tenant can assign its leasehold interest or sublease all or part of the leased premises depends largely on the terms of the lease agreement and, in some cases, on statutory or regulatory conditions depending on the type of land. Such a right is not automatic and is usually dependent upon express terms of the lease agreement, the landlord’s consent (which is usu - ally required) and any statutory restrictions. If the lease is registered under the NLC (eg, for leasehold properties over three years), consent from the state authority might be required for assignments. This is especially relevant for long- term leases or leases of government or industrial land. Generally, the use of the premises by the sub - tenant or assignee must conform to the original permitted use. A formal Deed of Assignment or Sublease Agreement is typically required. 6.19 Right to Terminate a Lease The right of either the landlord or the lessee to terminate a lease would depend upon the lease terms. The common causes for a landlord to terminate the lease are:
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