n) Regulated tenancy as Sub-tenancy
At times, the regulated tenancy for a subdivided unit is a sub-lease created out of another tenancy. In such cases, the termination of a tenancy superior to the regulated tenancy (the head lease or superior lease) would destroy the leasehold estate under the regulated sub-lease (or sub-tenancy). Notwithstanding that the regulated sub-lease has not yet expired, the sub-tenant will have no legal right or interest to possess and occupy the property vis-à-vis the landlord and must deliver up vacant possession of the subdivided unit. The general rule of the relationship between head lease and sub-lease applies (see “Subletting”).
Recover the possession of the subdivided unit
A superior landlord who applies to the court for possession of the subdivided unit must post the Notice to Recover Possession on the main door or entrance to the subdivided unit (or the premises of which the subdivided unit forms part) on 3 consecutive days. Such notice is taken to be an effective notice served on the sub-tenant. Unless the sub-tenant has handed over the subdivided unit back to the landlord, the court will not grant leave to issue a writ of possession to enforce the order before the expiry of a period of 60 days beginning on the day immediately after the last day on which the notice is posted. In other words, the sub-tenants are granted a grace period of 63 days for moving out from subdivided units to be repossessed.
Claim compensation from the sub-tenant
In case the tenant of the regulated tenancy (sub-tenant) fails to hand over the subdivided unit back to the landlord on the date the regulated tenancy is terminated (termination date), the superior landlord who terminates the head lease may recover compensation from the sub-tenant as a civil debt. If the superior landlord waives the right to recover the compensation in writing, the landlord of the regulated tenancy (sub-landlord) may do so.
The compensation amount is calculated by the monthly rent payable by the sub-tenant under the regulated tenancy times the number of months covering the period between the termination date and the date on which the sub-tenant hands over the subdivided unit back to the landlord. If the number of months covering the period is not an integer, it is to be rounded down to the integer.
The compensation recoverable must be paid by the sub-tenant within 15 days after the date on which the sub-tenant hands over the subdivided unit back to the superior landlord or sub-landlord.
Beyond the compensation, however, the right of superior landlords or sub-landlords to make further claims to sub-tenants, sureties or guarantors for the sub-tenants and other occupiers under common law rules or equitable principles is abrogated.
Notwithstanding the usual practice of “costs follow the events” in civil proceedings, subject to certain exceptions the court is not allowed to make any order to costs in favour of the superior landlord or sub-landlord (whichever is applicable) against the sub-tenant in the following proceedings:
- proceedings commenced by the superior landlord to recover possession of the subdivided unit;
- proceedings commenced by the superior landlord or sub-landlord to claim the compensation from the sub-tenant.
However, if the sub-tenant has conducted the case in a frivolous or vexatious manner, or in respect of the costs of any counterclaim made by the sub-tenant in the above proceedings, the rule will not apply.
Also, no interest on all or any part of the compensation may be included in the sum for which judgment is given in favour of the superior landlord or sub-landlord (whichever is applicable) against the sub-tenant in the above proceedings.