Real Estate: What is the length of notice required to terminate a tenancy validly?

In this article, Ng Lyn Ee considers the length of notice required to validly terminate a tenancy.

Introduction

If the parties to a tenancy wish to have the right to terminate that tenancy prior to the expiry of the term, the tenancy agreement should include terms and conditions governing such early termination which includes the notice period required for the termination of the tenancy. If a tenancy agreement includes such notice of termination clause, the parties are bound by the clause.

What happens if there is no tenancy agreement, if a tenancy agreement expires and the tenant continues in occupation of the demised premises with the consent of the landlord or if the tenure/expiry date of the tenancy is not set out in the tenancy agreement?

Periodic tenancy

A periodic tenancy is a tenancy that continues for successive periods until the tenant gives the landlord notification that he wants to end the tenancy. For a periodic tenancy, the length of notice depends on the period of the tenancy and, in the case of periodic tenancy of less than a year, the notice to quit shall be one full period, expiring at the end of a completed period¹. Therefore, a weekly tenancy requires a week's notice and a monthly tenancy requires a month's notice. For a year-to-year tenancy, the general rule at common law is that half a year’s notice must be given².

For the purposes of determining the cycle of the periodic tenancy, it is settled law that a letting of a house at a monthly rent raises the presumption of a monthly tenancy³. Whilst the mode of payment of rent is a crucial factor to determine the periodic tenancy and in turn the sufficiency of the period of a notice to quit, it is not necessarily a decisive factor.

In Cheng Hang Guan v Perumahan Farlim (Penang) Sdn Bhd⁴, the High Court held that where there was no written tenancy agreement, factors to be taken into account included not just the mode of payment of rent but also the conduct and intention of the parties, the contemplated user of the subject matter of the tenancies and other relevant circumstances of the case as a whole.

On the facts of the case, the tenants’ families had been staying on the land for over 100 years, paying rent every month and had converted the land from a jungle into a farm, the High Court held that three months' notice would be reasonable for the determination of the tenancies of the farm as this would afford the tenants sufficient time to harvest their crops and to yield vacant possession of the plot concerned.

After the expiry of fixed-term tenancy

A fixed-term tenancy is one that lasts for a specific amount of time as specified in a tenancy agreement.

Where a fixed-term tenancy expires and the tenant holds over at the end of the term, a new periodic tenancy will ordinarily be established by the acceptance of rent by the landlord unless the intention to create such a new tenancy can be disproved⁵.

Where a tenant holds over and where the rent payable under the tenancy is expressed as a yearly sum so that weekly, monthly or quarterly payments are instalments of that yearly rent, the new periodic tenancy will be a yearly tenancy; but where the rent is expressed in the lease as being a weekly, monthly or quarterly sum, the new tenancy will be respectively a weekly, monthly or quarterly tenancy⁶.

In Rohasassets Sdn Bhd v Weatherford (M) Sdn Bhd⁷, the tenants continued to occupy the premises for about two years after the expiry of fixed-term tenancies whilst the parties were in negotiations for fresh tenancies. As the parties were in negotiation for renewal of the tenancies and the landlord accepted tenders of monthly rent from the tenants without any complaint and did not issue notice to quit, the Federal Court held that the landlord had by conduct waived its right to charge double rent during the negotiation period.

When the negotiations failed, the landlord gave the tenants a notice dated 19 August 2011 to deliver vacant possession of the premises on 1 October 2011. It was held that after the expiry of the fixed-term tenancy, the tenants became monthly tenants and therefore the notice to quit was not unreasonable.

Imperfect lease

S & M Jewellery Trading Sdn Bhd v Fui Lian-Kwong Hing Sdn Bhd⁸ is a case where the sub-lessor by a sub-lease agreement granted the sub-lessee a lease for a term of 25 years and the rent payable for the sub-lease period was divided into eight consecutive terms of three years respectively and one final term of one year. The sub-lessor failed to register the sub-lease with the relevant land authority and the sub-lessee terminated the agreement on the ground of the non-registration of the sub-lease three years after the commencement of the sub-lease.

The Federal Court held that equity could compel specific performance of the sub-lease which would be treated as if registered. However, it was the sub-lessee who acquired the equity to protect its occupation and it would be unjust to turn the equitable lease for the full term against the sub-lessee to secure rent for the sub-lessor.

The Federal Court held that an unregistered lease is an imperfect lease which is an agreement for a lease. If the tenant is let into possession under the imperfect lease, he becomes a tenant at will. When the tenant pays or expressly agrees to pay rent, the tenancy at will changes into a periodic tenancy. As there was an equity in favour of the sub-lessee in the instant case, the unregistered sub-lease became a year-to-year tenancy and either party in the case of a yearly tenancy could, in the absence of agreement, determine the tenancy by six months’ notice.

If the tenant under an imperfect lease pays monthly rent to the landlord and is unable to show that an equity has been created in the tenant’s favour, the monthly tenancy will be terminable with one month’s notice⁹.

Conclusion

If a tenancy agreement contains a notice of termination clause, the parties are bound by that clause by agreement. Where there is no agreement on the length of notice:

• for a periodic tenancy of less than a year, the notice to quit shall be one full period, expiring at the end of a completed period.
• for year-to-year tenancy, the general rule is that half a year’s notice must be given.

Where a fixed-term tenancy expires and the tenant holds over at the end of the term with the consent of the landlord, the tenancy becomes a periodic tenancy. Where a lease is not registered in accordance with the law, the “lease” may turn into a periodic tenancy depending on the circumstances. In both situations, the rules on the length of notice for a periodic tenancy will apply.

NG LYN EE
REAL ESTATE PRACTICE GROUP

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¹ Saadian Bte Karim v Ong Ting Chai [1996] 5 MLJ 646.
² S & M Jewellery Trading Sdn Bhd v Fui Lian-Kwong Hing Sdn Bhd [2015] 5 MLJ 717.
³ Veeriah v Mal Singh [1969] 2 MLJ 93 Federal Court.
⁴ [1993] 3 MLJ 352.
⁵ Syarikat Rani' S v Zain Building Property Development Co Ltd [1980] 1 MLJ 247.
⁶ Syarikat Rani' S v Zain Building Property Development Co Ltd [1980] 1 MLJ 247.
⁷ [2020] 5 CLJ 202 for Court of Appeal judgement; [2020] 1 CLJ 638 for Federal Court judgement.
⁸ [2015] 5 MLJ 717.
⁹ Tan Khien Toong v Hoong Bee & Co [1987] 1 MLJ 387.