Termination of tenancies (by non-payment of rent)

XIII. Termination of tenancies (by non-payment of rent)

For a tenant who fails to pay rent fully or partially, sometimes the tenancy agreement may contain an express clause which entitles the landlord to terminate (or ‘forfeit’) the tenancy agreement upon any extent of non-payment or late payment of rent.

Under sections 117 and 126 of the Landlord and Tenant (Consolidation) Ordinance (Cap.7), it is implied by law that non-payment of rent for more than 15 days of the due date would give rise to a right for the landlord to forfeit/terminate the tenancy agreement.

Alternatively, a landlord may also accept repudiation and terminate a tenancy agreement upon persistent non-payment of rent of a tenant for many months or there is evidence to suggest that the tenant has absconded/abandoned the property for good.

Upon termination/forfeiture of the lease, the landlord may claim for an order for possession of the property in Court (or the Lands Tribunal). If the tenant does not oppose such claim, such order would usually be made.

However, a tenant whom defaulted in payment of rent for the first time may apply for a grace period and would usually be given a chance by the Court or the Lands Tribunal (i.e. once during the term of the tenancy agreement) to pay up for all outstanding rent and the landlord’s legal costs at the time of hearing of the application or within a specified period after the possession order is made. This is commonly known as ‘relief against forfeiture’ (for non-payment of rent) which is governed under section 21F of the High Court Ordinance(Cap.4).

If ‘relief against forfeiture’ is granted to the tenant and he does pay up the in full all outstanding rent and the landlord’s costs within the stipulated period as imposed by the Court, the term of the tenancy agreement will become ‘resurrected’ upon the tenant’s compliance and be treated as continuing under its original terms as if there was no default on rental payment before. In such event, the tenancy will become ‘revived’ notwithstanding that this might be against the landlord’s wishes.

It must be noted that ‘relief against forfeiture’ can only be granted as of right upon the application of the tenant for once the Court during the duration of the tenancy agreement. If there is a repeated instance of non-payment of rent, the Court would decline to grant any relief unless good reason is shown by the defaulting tenant.