6 Common Terms in Tenancy Agreements & What They Mean
While a potential tenant or landlord has the freedom to negotiate the specific terms in their tenancy agreement, there exist several common terms for such agreements. As a potential tenant or landlord, it is useful to have knowledge of such terms and what they mean.
This article provides a guide on the obligations these common terms impose on a potential landlord and tenant.
1. Clause stating the obligation to pay rent
A clause to pay the agreed rent is a common express clause in tenancy agreements. Notably, rent need not always be in the form of money but could also be by way of services rendered.
Such a clause is commonly worded as:
“The Tenant hereby agrees with the Landlord to pay the said rent at the times and in the manner aforesaid.”
2. “Quiet enjoyment” and “exclusive possession” clause
Leases usually have a clause for “quiet enjoyment” or “exclusive possession”. Generally, this imposes upon the landlord an obligation to give the tenant the freedom to exercise his right of occupation as well as the full benefits of such occupation. Accordingly, a tenant who has exclusive possession of the premises can keep strangers, and even the landlord, out of the premises.
An example of such a clause is as follows:
“That the Tenant … shall peaceably hold and enjoy the said premises during this tenancy without any interruption by the Landlord or any person rightfully claiming under or in trust for the Landlord.”
3. Diplomatic clause
A diplomatic clause, which is usually found only in tenancy agreements for a lease of 12 months or longer, allows for the termination of the lease before its expiry at a fixed time (or times) or upon the occurrence of specified event(s).
A diplomatic clause is especially important for foreign expatriates whose stay in Singapore might be of an indefinite length. Such a clause protects the tenant in the event that he cannot stay in Singapore anymore (e.g. if he is transferred out of Singapore or if his company terminates his employment during the tenancy). By invoking the diplomatic clause, he need not pay the agreed monthly rent for the duration of the tenancy that is unoccupied.
A diplomatic clause is usually expressly drafted to be exercisable by the tenant only. Nevertheless, if the lease does not specify which person can exercise the option, it may only be exercised by the tenant.
A diplomatic clause should generally specify the following:
- What counts as sufficient notice to the landlord.
- The compensation that the tenant must provide if insufficient notice was given.
- The reimbursement that the tenant must provide in respect of the brokerage fees incurred by the landlord for the unexpired portion of the tenancy.
Exercising the diplomatic clause
Generally, the tenant must show documentary evidence of his company transferring him to another country or that of his cessation of employment to invoke the diplomatic clause. Other conditions for the exercise of the diplomatic clause may be agreed upon and incorporated into the tenancy agreement.
Once the tenant is aware of such transfer or cessation, he should show proof to the landlord as soon as practicable to ensure that sufficient notice is given within the notice period as stipulated in the tenancy agreement.
4. “Good and tenantable repair and condition (fair wear and tear and acts beyond the control of Tenant excepted)”
In tenancy agreements, a clause that imposes upon the tenant an obligation to keep the premises in “good and tenantable repair and condition” is commonly worded in. Generally, this means that the tenant is obligated to keep the premises in good condition.
Such a clause is often followed by a caveat – “fair wear and tear and acts beyond the control of Tenant excepted”. This serves to qualify the tenant’s obligation by limiting his liability to compensate the landlord for damage that was not caused by reasonable usage or normal aging.
Accordingly, if the damage was not because of “fair wear and tear”, the landlord can retain the security deposit (or a part of which) as compensation or otherwise request the tenant to arrange for repairs to be made.
It should be noted that what counts as “fair wear and tear” cannot be generally defined since it is fact-specific. Generally, it would be unreasonable for a landlord to withhold the security deposit or ask for a replacement or a door, the repainting of a whole house or the re-tiling of the whole floor simply because of a few scratches caused by normal usage or aging.
5. Clause forbidding ‘alterations or additions’ to premises
A tenancy agreement will usually provide that the tenant cannot make any alterations or additions to the premises without the landlord’s consent. Essentially, the tenant should not change the structural nature of the premises, unless expressly sanctioned by the landlord.
For example, a tenant should not remove fixtures or pull down the premises. Other examples include the unauthorised installation of air-conditioning units or doors.
6. Right of re-entry clause
A right of re-entry clause gives the landlord the option to forfeit the tenancy and re-enter the premises when the tenant has breached the terms of the tenancy agreement, specifically, when the landlord has failed to pay rent. Notably, the right of re-entry for breach of the agreement to pay rent is implied in all leases for land governed by the Land Titles Act.
An example of such a clause is as follows:
“… if the rent hereby reserved shall not be paid for _____ days after its due date or if there shall be a breach of any of the conditions, covenants or stipulations on the part of the Tenant herein contained, the Landlord shall be entitled to re-enter upon the said premises and thereupon this tenancy shall immediately absolutely determine but without prejudice to any right of action of the Landlord for damage or otherwise in respect of any such breach or any antecedent breach”.
Refer to the article on Tenant-Landlord Rights in Singapore for a more comprehensive guide on how a landlord may exercise his right to re-entry.
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