One Sided Shopping Mall Tenancy Agreement

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asked on Jun 23, 2014 at 21:38

Our company (xxx sdn. bhd) have signed a Tenancy Agreement with a Shopping Mall management (Landlord) in October 2011 for a period of 3 years until October 2014 for RM11k+/month, hoping the new shopping mall will do well, and our business flourish, but things turn up side down since the opening, and beside not being able to recover the hefty renovation done etc, every month we are losing money and paying the majority of the rental from our own pocket, this year, the sales generated from the outlet is even lower than the rental itself, so after deducting our product costs, staff, electricity etc, it has come to a point that me and my partner are now carrying a whole load of debts and affecting the livelihood of our family... so we are effectively unable to pay rental for the past few months.

this February we have spoke to the management about our intention to terminate the TA early, as we couldnt afford to pay for the rental, the management company disagree, and say that if we do so, we will have to pay the remaining full term rental until this October, even if we are not occupying. The person in charge eventually say they will try to find replacement tenant, and if there is any replacement found, they might just forfeit the 3 months deposit. 4 months has passed, they are unable to find replacement tenant, there are other vacant lots from tenants who terminated and left early in the same shopping mall, still vacant also. Now they serve me a court summon to our company and ask us to attend to the Duta court for mention (pegurusan case), and recover the outstanding rental, late payment interest over these years.

We have signed their agreement in 2011, supposingly a standard one sided agreement of about 50 pages, covering everything from charging interest and cutting our electricity if we pay rental late, and if we intent to terminate early, it is not possible, as they will forfeit our deposit and we will have to pay them the remaining rental for remaining 3 years term. My question... would appreciate some help:

1. Since the tenancy period is until October, and they dont allow us to terminate few months back, I believe there is no point for me to terminate early, as I will risk losing 3 months rental, for 3 months+ early termination (july-september). Did I miss out anything?

2. In practice, are landlord allow to charge rental of 18% per annum for late payment? (non financial institution), are they legally able to do so if they have previously promise (Oral) that the interest will be waived, it is written in the tenancy agreement?

3. They have warn with notice to cut our electricity several times for late payment, and really cut the electricity to our shop unit. Is this a ground for our defense? as this might be something they did wrongly that might help our defense if any...

4. Is there a limit on the rental that can be claimed by the landlord? e.g. more than the deposit? we are now owing 6 months rental to the landlord up to this month, and they are holding 3 months deposit from us.

5. What is the most likely outcome that will happen to our sdn bhd, and also me and my partner as a director (no guarantor has been signed), as we are really unable to pay the outstanding rental due to the extremely low sales generated, and unable to terminate the tenancy.

6. What is the best way to handle this... since a court summon has been issued for mention (pegurusan case) 21st July, shall we try to find a good lawyer and attend the court, or better speak to the management company? which I supposed they are not flexible to give way anymore.

Thanks very much in advance for any response, greatly appreciated...
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3 Answers

answered on Jun 26, 2014 at 12:23
To my understanding, your sdn bhd company owes rent dues and none of the company directors signed as guarantors for the said company's lease of the premises, you do not have to worry for the company is solely liable. In other words, just close the doors of the shop as the landlord cannot take action against directors individually. The landlord can only sue the company for the amount and get whatever remains from sale of the company assets (stock inventory, cash in bank, furniture etc) through legal court procedures under Bankruptcy Act. This means declaring the company bankrupt (tutup/closed)and the company is 'dead' for good (no more doing any business).

Please do seek legal advice as you need to be certain on what words, legal terms of the signed agreement done between the company and the landlord since you said it is one-sided tenancy agreement.
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answered on Jul 11, 2014 at 15:26
Hi Retail Newbie,

Is there any update on your case?

Would like to know if you managed to reach a positive conclusion to this saga.
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answered on Jun 11, 2015 at 23:37
I would like to know the outcome also, having quite similar situation now.
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