Renters’ rights still depend on 19th century legislation

During the course of the Cayman Compass housing series, readers came forward with questions and concerns about the rental market.

We heard stories of tenants living in cramped conditions without access to power or water and subject to harassment and intimidation from so-called ‘slum landlords’.

We were also inundated with more routine reports of disputes, mostly from tenants complaining about unfair evictions, failure to return security deposits or landlords reneging on the basic requirements of a contract.

In an effort to answer some of the most common questions, we analysed Cayman’s existing laws and consulted lawyer Linda DaCosta, a partner at HSM Chambers, and an expert in this area.

Which laws apply to landlords and tenants in Cayman?

The Registered Land Act and the Landlords and Tenants Act are the two pieces of legislation which most closely impact the rental market.

The former, enacted in 1837, is painfully out-of-date and covers things like the rights of landlords to seize cattle from tenants that are in arrears. The Law Reform Commission recommended it be repealed in 2005 and proposed a new Residential Tenancies Law which was passed by the Legislative Assembly in 2009, but has never been brought into force. In the absence of strong legislation, said DaCosta, a clear written contract setting out the rights and responsibilities of each party is essential.

Are there minimum standards for properties to be rented?

Unlike short-term rental properties designed for the vacation market, there is no annual licensing requirement for residential tenancies. Any home, whether owned or rented, has to be certified as fit for occupancy by the planning department at the time it is built, but there is no ongoing scrutiny. Work-permit holders are required to fill out an accommodation form and that is partly to enable immigration officers to ensure they are in fit and proper housing. It is not clear, however, that there is any active scrutiny of living conditions among permit holders. The Registered Land Act does include a number of implied obligations for landlords and tenants, which should be followed regardless of whether they are included in a written contract. Chief among them is that the property must be habitable.

What other legal obligations do landlords have?

As well as ensuring the property is ‘habitable’ the Registered Land Act specifies that landlords are obligated to keep the “roof, main walls and main drains and common passages” in good repair. There is also an established right to quietly and peacefully possess the property – meaning landlords cannot come and go as they please.

Certain obligations, including paying rent per the terms of the agreement and keeping the furniture in good repair, are implied on behalf of the tenant, regardless of whether they are explicitly stated or not.

DaCosta believes the provision of power and water connection, for example, would be mandatory on the part of the landlord in order for the property to be considered habitable.

The contract would determine who pays the bills.

Despite the protections of the law, DaCosta said a written rental agreement is always preferable and easier to enforce.

What can a tenant do if a landlord fails to meet these basic requirements? Who do they report to?

Rental agreements are governed by civil law and are enforceable through the courts. There is no government body to report breaches of contract to, and most complaints don’t rise to the level of criminal behaviour that would warrant police investigation. Tenants who feel they have been unfairly treated have to go to court to have their rights protected.

While that sounds intimidating, it is actually fairly simple, says DaCosta, emphasising again that a clear, written lease makes it easier.

The Summary Court handles small claims (where a dollar equivalent of less than $20,000 is at stake) and the magistrates provide support and guidance to anyone representing themselves. Organisations like the Legal Befrienders Service also provide support in some cases.

The 2009 law that was passed, but never enacted, sought to introduce a Residential Tenancies Commissioner to mediate disputes.

A proposal for a Housing Authority that could serve repair notices and ‘clearance orders’ in respect of properties deemed unfit for habitation was considered, but not included in the final draft at that time. Instead, the law included legal minimum standards for properties to be leased and widened the scope of the landlord’s duties to repair the property.

Is there any protection against rent inflation?

Cayman’s law does not provide for any protection against increases in rent prices. The free market dictates what landlords can charge. If you have a 12-month contract, for example, that locks in the rent for that period, but it is open to the landlord to increase the amount when the contract is up for renewal.

For month-to-month contracts, it is recommended that a notice period – usually around 30 days – is included for any increases in rent.

Has the Cayman Islands considered rent control?

The concept of rent control was considered by the Law Reform Commission when it examined the legislation in the wake of Hurricane Ivan. At that point, there was considerable concern in the community about rapidly rising rents, attributed in part to a reduced amount of habitable property.

The commission opined that this was a short-term supply and demand issue that corrected itself as Cayman rebuilt in the aftermath of the storm.

At that time, it expressed the view that market forces were the best way to manage the rental market and suggested rent control did not really work in other jurisdictions.

“The commission agrees with the opinion held by many economists that rent control is counter-productive and leads inevitably to a lower quality of housing accommodation,” the commission wrote.

Instead, it proposed lighter regulation of rents.

The draft law included provisions that tenants must be given 60 days’ notice of increases and stipulated that rent could not be increased twice in the same 12-month period.

What are the rules around evictions?

If you have registered the lease, you are protected against unfair eviction and landlords are required to obtain a court order.

Under the law, the tenant must be provided with notice specifying the alleged breach of contract – for example non-payment of rent – as well as the chance to remedy the breach,

in this case by paying the arrears, in a timely manner.

DaCosta recommends that any tenant registers their lease (and pays the stamp-duty fee) in order to access these protections. There is a potential difficulty in respect to leases for a term of fewer than two years, because the law specifically refers to the registration of leases where the term is over two years. However, there have been occasions where leases shorter than one year have been accepted and registered by Lands and Survey, she said.
The 2009 law proposed a system of fines for landlords that harassed tenants – for example, by cutting off power – in an effort to force them out of the premises.

A lot of disputes between landlords and tenants centre on the return of the security deposit. What are the legal rights here?

Again, this is an area that should be specified in the contract. DaCosta believes the return of the security deposit should be within a specific time frame (such as 30 days from the date of termination), provided certain conditions are met, and that tenants could successfully petition the Summary Court for remedy if it is unlawfully withheld.

The Law Reform Commission, in its report, suggested this was an area that needed to be clearly spelled out in the law. The commission warned that litigating such matters was intimidating and expensive for tenants and recommended a legal requirement that the terms upon which landlords retain deposits should be regulated and should always be stated in the written agreements. It also proposed that the deposits be held in trust, meaning the landlord would not be able to access the funds, until and unless there was a breach of contract that allowed them to retain the deposit.

Who has responsibility to fix a property damaged in a storm?

As part of the requirement to ensure the property is habitable, the landlord is legally responsible for major repairs after a storm. If the property is temporarily uninhabitable, the landlord can’t charge rent while it is being fixed, said DaCosta, as it would be a breach of the implied term that the tenant leases the premises for an uninterrupted period of time. If it is seriously damaged or destroyed, as many buildings were during Hurricane Ivan, then most leases contain ‘force majeure’ clauses that would terminate the contract.

What is the key advice to tenants and landlords?

The law currently provides some basic protections to both parties but written agreements are essential, said DaCosta. These should be as clear and as detailed as possible, specifying everything from whether pets are allowed, to the party responsible for utilities, the length of the notice period and the amount and conditions for the return of the security deposit.

She advises that the contract should be registered with Lands and Survey and anyone with a legitimate grievance should make a claim with the Summary Court.

She also advises that tenants ensure their contract is with the actual owner of the property, both to avoid being conned and to avoid the agreed terms becoming unenforceable.

What legislative changes would help?

If enacted, the Residential Tenancies Law 2009, would clear up some of the ambiguities around landlords’ and tenants’ rights. It would create a cheap and easy means to have disputes mediated and resolved; impose some basic price controls; and spell out minimum standards for rented properties.

It is not clear why the law, which was voted on and approved by the Legislative Assembly, was never enacted and, 12 years later, it is questionable whether it could simply be rubber-stamped in its current form.

Many of the problems outlined in the Law Reform Commission’s report, which the law sought to address, remain valid. But the report and the law were put together in the aftermath of Hurricane Ivan and some of its ideas are specific to that context.

If Cayman’s leaders want to address this issue (and the laws were described as archaic back in 2005) it is likely they would need to repeat the consultation and analysis exercise to come up with provisions that are fit for purpose in 2021.