808222 - Tips for 1st Time Landlords

SURFER’S GIRL

TIPS FOR FIRST-TIME LANDLORDS

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Ref: 808222. 2 Unethical Singapore Landlord-Lawyers
Subject: By-passing the Tenant's Realtor. Befriending the
corporate human resource manageress.

Comments: Lawyer-landlords forgetting ethics, "potong jalan" the Realtor actually makes the Occupant uncomfortable and careful.

August 22, 1998
From: Anne Brocklebank
To: Americans & All Surfers and all first-time Landlords.
2 real cases.

Case 1.
Asia USA realtor was asked to recommend a tenant for this Condo which was vacant for 3 months. After 3 days and evening of viewing over 50 apartments in Singapore, the American was interested in one Costa Rhu Condo owned by a Lawyer. It was assumed that the Lawyer-Landord would deal through the Agent or at least copy correspondence to the Realtor.

However, agreement (see below) was emailed to Asia USA Client, by-passing Asia USA. Most newcomer expatriates trust the realtor to look after his interest, after going out with him or her for house hunting over several days in this case. The expatriate sometimes does test the integrity of the realtor by conversation and therefore entrusts the realtor to look after his interest and explain to him the terms and conditions of the lease.

Therefore, it is prudent to go through the realtor rather than by-passing him/her. In the long term, you get appreciation, gratitude and referrals from the Realtor when the lease is due for renewal. Caucasian Expatriates, especially those from the USA and in senior management position (rental budget above $5,000 usually are in senior management positions) dislike "potong-jalan" (Malay word for cutting the road or by-passing in English) and feel very uncomfortable.

Please note that the Expatriate has had closer contact over several days and many hours in a car hunting for apartments and sometime, their wives get picked up from the Airport to house inspections.

By acting unethically, you jeopardise your closing chances considerably and make the Tenant to be extremely careful in relations with you. In the following case, the Tenant has asked why the Landlord insists on calling him direct in the USA when the Tenant has an agent and has felt very uncomfortable in the "high pressure" selling tactics of this Lawyer-Landlord. Coupled with an unfriendly lease terms and conditions, the deal is almost aborted.

Case 2.
As bad luck usually occur in succession, our Asia USA realtor encountered another Landlord-Lawyer who dealt direct with the corporate Tenant. She is a shareholder in a small development in Woodlands and still has 2 houses to lease. Due to economic decline, the houses could not be sold with profits made. One year ago, such houses could get rentals of S$9,000 but now, around $7,000.

Initially she was as sweet as sugar, requesting Asia USA Realtor to help out and recommend her company's property to the American prospects. There are more new ones completed and vacant and the American School is having its own enrollment decline resulting in lowered demand for such houses. Many wise Americans do not want to live next-door to the American school as it means that the spouse (usually car given to the other spouse) has to commute over 45 minutes to work downtown.

Once the lease was agreed, she became incommunicado (see www.asiahomes.com AFFORDABLE HOMES Article No. 808201 - The Landlord-Lawyer held incommunicado" She simply contacted the human resource manageress direct and handing over was effected without even informing the Realtor!

Her ulterior motive was now to get to know the human resource manageress and since this computer company has had a steady inflow of expatriates, to get the manageress to deal direct with her! There is no finesse and it ended in the American occupant wondering:

Whether the house will collapse since this joint-venture development could not sell the houses and now need to rent them. The lawyer was a share-holder and the Managing Director deals with accounts.

The impression was that the joint-venture partners were cutting corners (probably affecting the safety in the construction of the house) and saving on paying the Realtor's marketing fees.

Telling the Lawyer-Landlord and the Managing Director in front of the human resource manageress that he considers Asia USA realtor as his realtor representing his interests.

Inducing the Managing Director to inform all present (ie. human resource manageress, himself and the Lawyer-Landlord) that he would pay the agency marketing fees in securing a Tenant.

American Managers have a sense of fairness and these 2 cases advises newcomer Landlords to be build excellent Landlord-Realtor relations for the long term.

We doubt the human resource manageress will refer any cases to this Lawyer-Landord-Realtor as she could sense that there was a person (the Realtor) unhappy and any complaint about her to the Company would adversely affect her career. In the first place, she should have stopped the Landlord-Lawyer from dealing with her. It ended with the usual duties such as the stamping of the lease agreement and the opening of utilities account being handled by the Managing Director who should have better things to do!

A contract drafted by a Lawyer-Landlord in one case is presented for the benefit of newcomer expatriate client.

Comments by Asia USA Realty in intalics and green.

Red words and underlined are not commonly seen in typical Singapore lease agreements.

Hope you understand that the Landlord, being a lawyer, is looking after his own interest, without realising that he is jeopardising an excellent Landlord-Tenant relations he had built up while you were in Singapore.

These are extremely difficult times for the Singapore Landlord; however he overlooks the fact that he is dealing with top brains and a top manager from the USA and that you are aware of the glut of rental properties in Singapore!

THIS TENANCY AGREEMENT is made on [ ] August 1998 between

A. ……. and …….., both of No. ……. Road, Singapore 309766 (hereinafter called the "Landlord"); and

B. [please insert name of company], a company incorporated in [please insert country] and having its principal place of business at [please insert address] (hereinafter called the "Tenant").

WHEREBY IT IS AGREED as follows:

1. The Landlord agrees to let and the Tenant agrees to lease the Flat known as No.9 Rhu Cross, #……, Livonia Block, Costa Rhu, Singapore 437436 (hereinafter referred to as the "Premises") for a term of twenty four (24) months commencing from 1^st September 1998 to 31^st August 2000 together with the use in common with other persons entitled thereto for the Tenant, its servants and visitors of the entrance, all common facilities, halls, stair-case, corridors, passages, foot paths and roadway leading to the Premises for the purpose of passing and repassing at all times to and from the Premises YIELDING AND PAYING without demand the Rent (hereinafter referred to as the "Rent" or "Rental" as the context requires) of SINGAPORE DOLLARS FOUR THOUSAND only (S$4000.00) a month, payable monthly in advance, clear of all deductions, the first advance payment to be made on the execution of this Agreement and thereafter on or before the first day of each subsequent calendar month. All payments to the Owners shall be made by telegraphic transfer, free of all bank charges, to the "Overseas Union Bank Ltd, Singapore, Robinson Road Branch favouring account no: …… in the names of ……. and/or …….".

2. The Tenant hereby agrees with the Landlord as follows:-

(a) To pay to the Landlord a Deposit (hereinafter referred to as the " Deposit " of SINGAPORE DOLLARS TWELVE THOUSAND only (S$12,000.00) equivalent to three (3) months' Rent as security for the due performance and observance of the conditions of this Agreement which said sum shall be retained until the expiration of this Agreement but the said sum or any part thereof may be applied in or towards payment of any moneys outstanding or for making good any breach of this Agreement and the Hire Agreement entered into between the parties hereto on even date (hereinafter referred to as the "Hire Agreement") but subject as aforesaid to be refunded in full to the Tenant after one (1) month has lapsed from the date of the termination of this Agreement. The Deposit shall,

Industry's practice is 2 months' security deposit. Landlord said company has a foreign base but if the local counterpart signs the lease, the deposit will be 2 months.

Hire Agreement between Landlord and Tenant is not an industry's practice to be included in the usual lease. Landlord said the Agreement was for his income taxation purpose.

(i) increase in proportion to the amount of any increase in the Rental and the Tenant shall pay the Landlord forthwith upon being notified of the additional amounts required by way of Deposit;

(ii) be maintained at the agreed amount based on the Rental; and

(iii) not be utilised for the purposes of and in substitution of the obligation to pay the Rent.

(b) To pay the Rent hereby reserved on the days and in the manner aforesaid.

(c) To pay any charges or fees, by way of additional or original payment, imposed by any authority, including the management corporation (if any), within two (2) weeks of being notified of the amount by the Landlord.

Fees imposed by the management corporation is typically payable by the Landlord. I guess the poor Landlord had been squeezed by you such that his net rental has dropped considerably and is attempting to sneak in this clause. Maybe he didn't think this agreement will be sent to Asia USA for advice as we did not receive a copy emailed to you. By-passing the realtor is a common practice of the "controller-type" personality of Lawyer-Landlords!

(d) To pay all charges for gas, electricity, sewerage fee and for any appliances hired from Telecommunications Authority of Singapore and any Government tax or taxes payable on such charges.

Appliances hired are in Tenant's name and therefore clause irrelevant.

(e) To keep the Premises and its surrounding areas clean, tidy, neat and free from any pests or insects.

Pest control usually not stated in typical lease agreement. Condo management usually informed if there are pests. Some "predatory-type" Tenants insists on the Landlord providing the pest control services.

(f) To keep in good and tenantable repair and condition the Premises including all doors, glass windows, shutters, locks and fastenings and the sanitary and water apparatus together thereof with all the fixtures and fittings (fair wear and tear and damage by fire, flood, explosion, act of God and any cause not arising out of any act or default on the part of the Tenant excepted) throughout the term hereby created and save as provided aforesaid to make good any stoppage of or damage to any pipes or plumbing systems and be responsible for an amount up to SINGAPORE DOLLARS TWO HUNDRED (S$200.00) in respect of any one repair.

Not acceptable for Tenant. Cost of repair of plumbing systems can be prohibitive. Surprising, this Lawyer-Landlord has not included that air-conditioning maintenance contract/servicing regularly to be the responsibility of the Tenant as is typical in many leases and rejected by most Tenants!.

(g) To permit the Landlord and/or their agents with or without workmen and others at all reasonable times by prior appointment to enter upon and examine the condition of the Premises and to execute repairs for which the Landlord is liable and so far as the Tenant is liable thereupon the Landlord may serve on the Tenant notice in writing specifying the repairs necessary to be done and require the Tenant forthwith to execute the same and if the Tenant shall not within fourteen (l4) days after the service of such notice, proceed diligently with execution of such repairs therein to permit the Landlord or their agents to enter upon the Premises to execute such repairs and the cost thereof shall be a debt due from the Tenant to the Landlord and be forthwith recoverable as such.

(h) To permit the Landlord and/or their agents, upon prior appointment to bring prospective clients to view the Premises for the purpose of letting the same after the expiration of the term herein, or for sale.

Interesting that the Lawyer-Landlord has not asked for 30 days before expiration of term as is typical in many lease agreeements.

(i) To use the Premises as a private residence only.

(j) Not to do or permit to be done upon the Premises anything which may be or may become a nuisance or annoyance to or in any way interfere with the quiet and comfort of the other occupiers of the adjoining buildings or the neighbourhood.

(k) Not to use the Premises for any illegal or immoral purposes.

(l) Not to make or permit to be done any alterations or additions to the Premises or to the Landlord's fixtures and fittings without first obtaining the written consent of the Landlord which consent shall not be unreasonably withheld.

(m) Not to keep or permit to be kept on the Premises or any part thereof any materials of a dangerous or explosive nature the keeping of which may contravene and/or breach any local statute or regulations whereby the Landlord shall be exposed to penalty, fine and forfeiture or in respect of which an increased rate of insurance may be required.

(n) To give to the Landlord and/or their agents notification of any outbreak of fire on the Premises and/or any damage or destruction caused by explosions, storms, tempest, floods or aircraft or articles dropped therefrom as soon as practicable.
Clause usually not seen in typical leases.

(o) At the expiration of the term hereby created to peaceably and quietly deliver up to the Landlord the Premises together with all the fixtures and fittings in like conditions as the same were delivered to the Tenant at the commencement of the term hereby created (authorised alterations or additions and damage by fair wear and tear and damage by fire, flood, explosion, act of God and any cause not arising out of any act or default on the part of the Tenant excepted). The Tenant's obligations herein shall include the repair of any holes or damages made to walls or structure of the Premises, the removal of any articles or objects which were not present at the commencement of the term herein, the re-painting of the Premises, if required by the Landlord and ensuring the general cleanliness of the Premises and its surrounding areas.

Cost of re-painting can be as high as S$2,000 - $3,000 for this condo. Few Tenants are agreeable to this. Some corporate Tenants do re-paint but such gems are rare.

(p) To observe continue and keep in subsistence the Hire Agreement entered into with the Landlord on even date for the hire of the fixtures and fittings within the Premises.

A Hire Agreement between Landlord and Tenant is not present in a typical lease.

(q) Not to do or permit or suffer to be done anything whereby the policy or policies of insurance on the Premises against damage by fire may become void or voidable or whereby the rate of premium thereon might be increased and to repay to the Landlord all sums paid by way of increased premiums and all expenses incurred by them in or about any renewal of such policy or policies rendered necessary by a breach of this covenant and any such payments shall be added to the Rent hereby reserved and be recoverable as Rent.

Condiiton present in some leases. Not acceptable by most Tenants.

(r) Not to assign underlet or part with the possession of the Premises or any part thereof without the consent of the Landlord which consent shall not be unreasonably withheld PROVIDED ALWAYS that this prohibition shall not apply to the occupation of the Premises by the Tenant's staff.

"sublet" is the word in typcial lease.

(s) At all times during the term hereby created to comply with all requirements as may be imposed on the occupier by any authority, including the management corporation (if any) or by any Act of Parliament now or hereafter in force and any orders, rules, regulations, requirements and notices thereunder.

(t) Indemnify the Landlord for all charges, expenses and costs (including legal costs on a solicitor and client basis) incurred by the Landlord in connection with and arising out of this Agreement and the enforcement of the terms herein.

Not acceptable for Tenant. Legal costs can be high. Each party to pay its own legal and administrative costs. Please forgive the Lawyer-Landlord for making you uncomfortable as he is looking after his own interests!

3. And the Landlord hereby agrees with the Tenant as follows:-

(a) To pay all taxes payable by the Landlord in respect of the Premises during the term hereby created.

(b) That the Tenant paying the Rent hereby reserved and observing and performing the several covenants and stipulations herein contained shall peacefully and quietly hold and enjoy possession of the Premises during the term hereby created without any interruption by the Landlord or any person or persons lawfully claiming under or in trust for them.

(c) Subject to clause 2(f) above, to keep in good structural repair and condition the floors, doors, ceiling/roof, walls, pipes, wires, sanitary and water apparatus in or about the Premises.

Not acceptable for Tenant. Cost can be prohibitive.

4. PROVIDED ALWAYS, it is hereby agreed as follows:-

(a) If the Rent hereby reserved or any part thereof shall be unpaid for seven (7) days or be unreasonably withheld after becoming payable (whether formally demanded or not) OR if any covenants or stipulations on the Tenant's part herein contained shall not be performed or observed (or if the Tenant being a Company shall go into liquidation either voluntarily, save for the purpose of amalgamation or reconstruction or compulsorily) THEN and in any of the said cases it shall be lawful for the Landlord at any time thereafter to re-enter the Premises thereupon this Agreement shall absolutely determine but WITHOUT PREJUDICE to the right of action of the Landlord in respect of any breach of the Tenant's covenants herein contained and the right of the Landlord to charge interest at an agreed rate of three per cent (3%) per month on the amount of any arrears in Rent.

Not acceptable for Tenant. Interest is 36% per annum. Rates found in typical leases, if any, are 8% or less per annum.

(b) In the event that the Premises or any part thereof at any time during the term hereby created is damaged or destroyed by fire act of God or other cause beyond the control of the Tenant as to render the Premises unfit for use or access hereto impossible then (except where such fire has been caused by the default or negligence of the Tenant or the Tenant's servants or agents) the Rent hereby reserved and the hire charge for the fixtures and fittings payable under the said Hire Agreement or a fair proportion thereof according to the nature and extent of the damage sustained shall be suspended and/or refunded until the Premises shall again be rendered fit for occupation and use or until access thereto may be obtained PROVIDED THAT in case the Premises shall be destroyed or substantially damaged as aforesaid and are not rebuilt or repaired to be fit for use and occupation within three (3) months from the occurrence of the destruction or damage either party hereto shall be at liberty by notice in writing to determine the tenancy hereby created and upon such notice being given, this Agreement shall immediately and absolutely cease and determine but without prejudice to any rights of the Landlord in respect of any antecedent breach by the Tenant of any of the terms of this Agreement.

Typical lease does not have hire charges.

Duration can be 2 months or less.

(c) Any indulgence given by the Landlord shall not constitute a waiver of or prejudice the Landlord's rights herein. The acceptance of Rent or other moneys by the Landlord shall not be deemed to operate as a waiver by the Landlord of any right to proceed against the Tenant in respect of any of the Tenant's obligations contained herein.

Landlord should not make Tenant uncomfortable with such clauses but this is a clever lawyer-landlord.! Clause not present in typical leases and should have been struck out to build excellent Landlord-Tenant relations.

(d) Notwithstanding anything herein contained, the Landlord shall be under no liability to the Tenant, the occupier or members of the occupier's family or to any other person who may be permitted to enter, occupy or use the Premises or any part thereof for accidents happening or injuries sustained or for loss or damage to properties goods or chattels in the Premises or in any part thereof whether arising from the negligence of the Landlord or that of any servant or agent of the Landlord or otherwise.

(e) Notwithstanding anything herein contained the Landlord shall not be liable to the Tenant or any other person in respect of any interruption in any of the services or facilities provided by the developer and/or management corporation by reason of necessary repair or maintenance of any installation or apparatus or damage thereof or destruction thereof by fire, water, act of God or other causes beyond the control of the Landlord.

Clause not present in typcial leases but a good lawyer-landlord should include this in his lease! The dilemma of this Landlord is that he likes you as a Tenant and yet he cannot help himself to include clauses which make the Tenant uncomfortable.

(f) The Landlord shall on the written request of the Tenant made three (3) months before the expiration of the term hereby created and if there shall not at the time of such request be any existing breach or non-observance of any of the covenants on the part of the Tenant hereinbefore contained grant the Tenant an option to renew the term hereby created for a further period of one (l) year from the expiration of the said term and except for this option to renew clause, on the same terms and conditions as are herein contained SUBJECT TO the right of the Landlord to review the Rental payable to an amount equivalent to the prevailing market value.

(g) The Tenant may terminate this Agreement after twelve (12) months, from the date of the commencement of this Agreement, have lapsed by giving the Landlord three (3) calendar months' written notice (commencing from a date after twelve (12) months have lapsed) of its intention to determine this Agreement or by paying three (3) months' Rent in lieu of notice in the event that the employee of the Tenant, …., holder of Passport No. [please fill in], occupying the Premises from the commencement of the term hereby created is:
Not acceptable for Tenant. 2 months is industry's practice although some "predatory-type Tenant" insists on 1 month, taking advantage of the rental decline situation and the desperation of the Landlord to find Tenants. In this case, "2 months" is recommended. In a rental decline market, Landlords have no choice and some even accept one month.

(i) deported from Singapore or transferred out of Singapore; or

(ii) refused permission by the Singapore Government to reside in Singapore; or

(iii) ceased to be employed by the Tenant and proof thereof shall be tendered to the Landlord; or

(iv) transferred or relocated by the Tenant from Singapore.

(h) Any notice under this Agreement required to be served upon the Tenant shall be sufficiently served if forwarded to the abovementioned address or to its last known place of residence or business and any notice required to be served upon the Landlord shall be sufficiently served if delivered to them personally or sent to them by registered post to their abovementioned address or to their last known place of residence or business. Any notice sent by registered post shall be deemed to have been given at the time when in due course of post it would be expected to be delivered to the address to which it is sent.

(i) All legal costs and stamp duties payable in relation to this Agreement and the Hire Agreement shall be borne by the Tenant.

Not present in typical leases. Each party pays its own legal cost, in the industry practice.

[Intentionally left blank]

IN WITNESS the hands of the Landlord and the duly authorised representative of the Tenant the day and year first abovewritten.

[Intentionally left blank]

SIGNED by the Landlord, ….. )

… and …. )

in the presence of: )

[Intentionally left blank]

SIGNED by )

who is duly authorised to )

sign for and on behalf of )

the Tenant in the presence of: )