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Case study:
The Corporate Landlord's
tenancy agreement can be quite complex

A brief report on common legal hassles encountered by expatriates negotiating corporate leases is presented in response to numerous expatriate queries and emails.

Corporations usually have their own standard tenancy agreement with many conditions unfavourable to the Tenant. These are:

1. The Tenant to pay Goods and Service Tax (GST) on the rent and the maintenance fees of the condominium. The fees are paid by the Landlord but the lawyer will try and make the Tenant pay the GST. If the Tenant is a corporation, it can claim back the GST, but if the expatriate himself is the Tenant, i.e. a personal lease, the expatriate incurs additional rental costs.

2. The Tenant to pay any increase in the maintenance fees during the term of the lease. The expatriate may limit the increase to, for example, 5% per annum. Or find another privately owned property to rent. Maintenance fees are not increased arbitrarily and monthly, as they have to be approved by the authorities.

3. The Letter of Intent sent in by the Tenant's realtor on behalf of the Tenant lists all items and services to be performed by the prospective Landlord. It is usually ignored by the corporate Landlord who may issue his own "Letter of Offer" which may have some different terms and conditions.

"You had been slip-shod in your services !", one angry American told Realtor David off when he asked whether the tenancy agreement to be signed by his Company and the corporate Landlord referred to the terms of the Letter of Intent. When the realtor is by-passed because the lawyers of the Tenant, this being a corporate lease and the Landlord deal with each other, there is a possibility that the terms and conditions of the Letter of Intent approved by the expatriate (in this case, an Occupant) are overlooked.

In law, the Landlord could say that the tenancy agreement would be binding and it would be too bad if the Letter of Intent had not been considered.

It can be quite frustrating for a top manager to make such a remark and I can understand that it was due to the stress of the negotiations.

The Tenant's lawyer was very abrupt to me shouting why I told the Tenant's executive not to issue the cheques for the deposits.

I told her that the Landlord's executive said that the terms were not approved yet and therefore there was no point in preparing the security deposit.

That was what I was told, but the real dealings were between the lawyers. Much time had had been spent on the legal technicalities and she was pissed off.

4. Just 5 days ago, the Landlord's executive just told me point blankly: "The deal is off", because it was costly as the lawyers of the Landlord spent much time on fleshing out the details with the Tenant. I had to salvage and see what could be a compromise.

This was one case where the Landlord wanted the Tenant to service the air conditioners and the roof top jacuzzi and the Tenant did not want to do so.

Since the Occupant really loved this condo, I offered to pay for the servicing but he just would not want me to do so. This disagreement could just make or break a case.

The rent of $16,000 was deemed too low by the Landlord who probably had another offer during the 6 weeks of legal tussle.

5. "Dry clean the curtains quarterly or the deal is off" is another situation for the expatriate to handle. In this case, the Occupant agreed to dry clean at the end of 12 months as he had got a low rent for a brand new condominium.

Most importantly, his wife like it and Dutchmen are said to love their wives.

6. Payment of legal fees to the Landlord's lawyer for the preparation of the lease. This is one condition imposed by some private individuals as well. Usually, each party pays his own legal fees. Realtors should include this condition in the Letter of Intent.

7. Minor repairs of $250 per item per occurrence imposed by the Landlord. The amount can be negotiated. If the Landlord is weak, the minor repairs are borne by the Landlord.

8. Diplomatic clause of 6 months or even 2 months. Many Landlords will not accept less than 12 months of occupancy but the expatriate can try his luck. If the expatriate asks for such terms, it indicates that he is in an unstable employment situation and most Landlords will prefer not to get involved.

Some airline pilots have this short notice clause to break the lease and if there is recession, the Landlord may take the chance.

9. Payment of property tax. Somehow, the corporate tenancy agreement would have this term squeezed in. It is definitely not an industry's practice for residential leases and not acceptable by the Tenant. No harm in trying to increase the bottom line of the corporation I presume.

10. "You are on your own" if the Landlord does not agree to use the Company (Tenant) lease, one Englishwoman working for an oil company was told. That means corporate Landlords are not advised as they tend to insist on the use of their tenancy agreement and are reluctant to make amendments as it would be costly.

However, as a newcomer expatriate, use your common sense. There are many good properties from Corporate Landlords and many of them are flexible.

If you need more information, contact judy@asiahomes.com or tel: +65 668 6468.