Landlords and tenants an uncertain relationship

 Need a place to live? For many renters, the process is simple: find a place you like, sign on the dotted line and just keep paying that rent. However when things don’t go perfectly smoothly, tenants often learn the hard truth: information on tenants’ rights is not widely circulated, and most tenants must resort to relying on the goodwill of landlords.
   With work permit numbers dropping, the economy facing difficulties and the market flooded with rental properties, there’s no time like the present to revisit what landlords and tenants need to keep in mind.
   Many renters in particular expatriates, enter the rental market with no knowledge of the laws which apply to them, having to rely on what others tell them and what their landlords assure them.
   The few existing pieces of legislation pertaining to this huge sub-industry of Cayman’s economy were recently supplanted with the passage of a new law, the Residential Tenancies Law 2009. However, the law has not yet been brought into force and is currently awaiting a commencement order to be issued, and it languishes in legislative limbo.
   The Compass reported in March of this year that Kearney Gomez, Chief Officer for the Housing Ministry, said the key position of Residential Tenancies Commissioner the law requires, cannot be appointed due to a freeze on government hiring. In addition, the Cayman’s general economic situation leads people like Richard Sykes of Cayman Law Associates to muse that it won’t be brought into force for other reasons.
   “In the current market, it is not clear if the enactment of this law will ever happen, considering it gives landlords a lot of  administrative responsibilities, something which may not be popular in this economic climate,” he says.
   Indeed, the landlord-tenant relationship is fraught with uncertainty from both the landlord’s and tenant’s perspective. In Cayman in particular, landlords rent to a very transient market. On the other hand, the lack of up-to-date legislation makes tenants more susceptible to unscrupulous landlords.
   
   Acknowledging a challenge
   In 2006 a draft bill from Cayman’s Law Reform Commission was written to address some of the issues that arose after Ivan, and a new law was passed called In its discussion paper on the new law, the Law Reform Commission noted that:
   “Hurricane Ivan brought unprecedented destruction to the Cayman Islands on 12th September, 2004. Damage estimates given by the National Hurricane Committee of the Government in 2004 indicated that 95% of buildings on Grand Cayman sustained damage as a result of Hurricane Ivan- 10-15% beyond repair. In Breakers and East End, the areas hardest hit, 80% and 50% of homes respectively were lost and Bodden Town’s coastal strip accounted for another 40% of destroyed homes. The damage to housing resulted in a shortage of accommodation, a steep increase in rents and an ongoing deterioration in the previously stable relationships between landlord and tenants on the Islands. As a result of the myriad social problems which arose, in October 2005 the Law Reform Commission was asked by Government to review the law governing the relationship between landlords and tenants.
   In its discussion paper, the Commission said the main issues relating to landlord and tenant relationships which had been brought to its attention were:
   steep and sudden increases in rent which resulted in calls for rent control legislation and the establishment of a housing authority:
   Uncertainty as to length of notice to quit especially in a situation where tenant is holding over.
   Tenants refusing to vacate after being given due notice.
   The unlawful eviction of tenants and harassment of tenants by landlords.
   Uncertainty as to the liability to repair damaged premises.
   Allegations that some landlords were, without legal reasons, refusing to return deposits.
   
   The discussion paper meticulously examines these various issues, in its explanation for the contents of the proposed legislation.
   Specifically, the Bill provides for the appointment of a Residential Tenancies Commissioner, a public officer, who would have power to determine, in accordance with the legislation, most disputes arising between landlords and tenants in relation to any tenancy to which the legislation applies or to which the legislation did apply at any material time. Appeals from the decisions of the Commissioner would be to the summary court.
   The 2006 bill, and later the 2009 law, made provisions for:
   • The contents of a tenancy agreement.
   • Regulation of security deposits.
   • Regulation of rent increase.
   • The keeping of records by landlords.
   • The landlord’s and tenant’s responsibilities under a tenancy agreement.
   • The landlord’s right of entry.
   • Termination of tenancies and recovery of possession.
   • Mesne profits.
   • Registration of tenancy agreements.
   • Liability of tenant who abandons premises.
   • Liability of tenant for the damage to or for the destruction of premises.
   • Penalty for securing entry by violent means.
   • Forms of notice to quit.
   
   “One thing this new law would bring in, if it is ever passed, is a standard form of lease,” says Sykes.
   In March 2009, the Compass reported that the new law would, among other things, require leases to be set out in writing and will empower the new Residential Tenancies Commissioner to help mediate disputes between landlords and tenants.
   Under the proposed law, landlords will face fines for not putting new rental agreements in writing.
   The law also sets out a list of details that should be listed on all rental agreements before it is signed by both parties. They include the amount of rent that is to be charged; the size of the security deposit; the period of notice that will be required to vacate a property; a list of goods left by the landlord; and a statement as to who is responsible for paying utilities.
   Parties that find themselves in disputes will be required to attend mediation with the Commissioner before they can take a dispute to court.
   The law also requires landlords hold security deposits on trust for tenants in a fixed interest account, with the interest falling due to the tenant at the expiry of the lease.
   Any dispute over the amount of money that can be kept to pay for damages to property can be referred to the Commissioner.
   
   When the 2006 bill was written, Tessa Hydes, a well-known property manager on the Island, says she was approached by another agent working in property management who had received a copy of the original draft.
   “On reviewing said document we got together as many professionals in the industry to meet with the law reform commissioner to voice our concerns of the unworkable nature of much of it, the fears for collapsing a very real and vital part of the Caymanian economy if it was adopted as it had done in Canada, the UK and other parts of the world it was tailored on,” she said.
   “Many investors will not invest in long term properties here if the rights of the tenants are more heavily favoured than the landlords which is how the draft law was.”
   Hydes has a number of specific concerns about the legislation.
   “The main concern is that the law calls for disputes to go before the court rather than be settled under the terms agreed in the lease,” says Hydes.
   “Therefore if a tenant is in arrears and has not paid rent or is damaging the property, a landlord can not change the locks and remove the tenants until a court order is approved,” she says.
   “This takes time and money, during which the landlord continues to lose.  Also with many tenants being expatriates, they are even more likely to do what often happens now, and that is not pay for the last months rent, utilities and damages and cleaning, and just leave the island with the owner having no recourse or deposit to cover his losses.”  
   Hydes points out the law also insists the security deposits held by landlords are put in an interest-bearing account. “Given the current interest rates, the time it takes to administer new accounts or calculating fees owed, as well as money held in roll over accounts where tenants will have to wait for possibly say an average of $10 return for the average deposit held in a term deposit for 12 months. The administrative costs to do this, as well as the additional time a tenant will need to wait for the return of his deposit,  makes this unworkable and prohibitive for the kind of efficient refund procedures tenants want,” she says.
   For now, the existing legislation applies to the landlord-tenant relationship, unless otherwise agreed to in a lease.
   Hydes has a few words of advice for landlords.
   “Always get a deposit, always get references, always check work permits are in place but always know there are no guarantees even with those things in place,” says Hydes.
   “I go with gut instinct a lot of the time and it serves me well.”
   And until the new law passes, if it ever does, Sykes says that above all tenants need to make sure they agree with the contents of their lease – BEFORE they sign.
   “If you are unsure about what’s in it, do not hesitate to ask someone,” he says, though, he is not aware of any tenant’s advocacy organizations on-Island that dispense free legal advice.
   For instance, tenants need to ask specifics like what happens if something breaks, and need to satisfy themselves from the start they are comfortable with the lease terms.
   Hydes agrees tenants must do their homework.
   “Read your lease!” she says.
   “Check about a get out clause. There is usually not one, therefore if you break your lease and decide the leave the apartment you will forfeit your deposit,” she says.
   “Many tenants seems surprised by this, scream injustice at their landlords but have signed off in agreement of it.”
   Hydes also advises tenants to make sure they sign off on the included inventory.
   “It is there to protect you.  If you don’t you may be inheriting  someone else’s damages which you will be liable for,” she says.
   And, she adds, it is always worth asking for a landlord’s reference.
   
   Those interested in reading the new legislation can find it at http://www.caymanlandinfo.ky, and follow the links under “documents” to “ laws and regulations.”