Business owners in Singapore typically operate out of a leased commercial space. Under these circumstances, disputes often arise between tenant and landlord.

This article will cover the most common issues that arise in Singapore when there are grievances over commercial leases and how to resolve these disputes between tenant and landlord.  

Common Issues Leading to Commercial Lease Disputes

1. Breaching the Lease Agreement

A lease agreement is breached when either the tenant or landlord fails to comply with one or more of the terms set forth in the lease agreement. The most common issues that arise involve the following: 

Utility and Maintenance Clause is Breached

In most commercial lease agreements, the landlord agrees to ensure that the common and exterior areas of the premises are properly maintained and kept clean. This is usually spelled out in the lease agreement. 

The landlord would be breaching this term when the following occurs: 

• The common and exterior areas are not kept clean, leading to an unhygienic environment, which is unhealthy and unpleasant for the tenants’ customers. 
• There are common hallways where people and products pass that are in poor condition and frequently obstructed, posing both a fire and safety risk.
• Routine and proper maintenance of escalators and elevators and/or safety equipment like fire extinguishers is lacking. This can cause people to be hurt, severely injured, or at the very least, inconvenienced during day-to-day business operations on the premises. 

This is only a partial list, but when tenants are concerned about an issue regarding the common areas, they should immediately inform the landlord and ask that the issue be resolved. More importantly, the landlord has a contractual duty to comply and if he/she fails to address the issue and a problem arises, it will most likely be judged his/her fault. 

Sub-Lease Clause is Breached

Tenants commonly lease a commercial space for their business, then find they don’t need all that space, so they sub-lease a portion to one or more other businesses. 

The landlord should stipulate in the lease agreement that sub-leasing a portion or even the whole space is only permissible with his/her written permission. 

If the landlord finds evidence that part of the commercial space is being used by another business under a sub-letting arrangement without his/her permission, the landlord has the right to terminate the lease and even claim that he/she is owed compensation. 

Employees Working Illegally

Commercial property tenants also commonly breach their lease agreement by hiring illegal workers. These are employees that do not have work permits, or people who have been prohibited from entering and/or working in Singapore. 

The landlord should make sure that a clause is in the lease agreement that forbids the tenant from hiring illegal workers in order to safeguard him/herself from being liable for civil and/or criminal penalties. 

If the tenant breaches the lease agreement by hiring illegal workers, the tenant can expect the landlord to terminate the lease and keep his/her security deposit. 

What is a Valid Reason to Terminate a Commercial Lease Agreement?

Commercial lease agreements usually contain a termination clause. It is typical of parties who have had their lease agreements terminated to claim that there was no valid reason to terminate the lease. 

When there is proof that the tenant breached the lease agreement, like if he/she went ahead and sub-let a portion of the space to some other business without first getting permission from the landlord, the landlord would have a perfectly valid reason to terminate the lease.

On the other hand, when there is no evidence to prove that there was a breach of the lease agreement, but the landlord terminated the lease anyway, the termination would not be valid. 

2.    Rent Increase

Another common grievance is when there is an increase in rent and the tenant thinks it’s unfair or too much given the market value. 

To avoid this issue, all commercial lease agreements should clearly state that any changes in rent should align with the market value. This way the tenant and landlord could use a bidding process or hire independent valuers to determine what the new rental amount should be.  

This article only discusses the most common grievances involving commercial leases in Singapore, but there are a lot more issues that can arise out of these disputes. 

How to Resolve Grievances Involving Commercial Leases in Singapore

1. Landlord and tenant can speak together directly in an attempt to reach an agreement.

If you and your tenant/landlord are in a dispute, the best way to try and resolve it would be to have a candid conversation with each other to see if you can come to an agreement. You should also keep copies of all relevant communications and/or documents that you may need as evidence to bolster your case. 

Should these discussions prove futile with no resolution in sight, you may want to seek mediation or turn to the courts. 

2. Try mediation. 

You can always use the Small Case Commercial Mediation Scheme to schedule mediation at the Singapore Mediation Centre. Under this scheme you can get the first two hours of your mediation session free of charge. 

The mediator appointed will be an unbiased third party who is trained to facilitate negotiations between both parties. Your mediator will make every effort to help you reach an amicable resolution.  

Unfortunately, there is no guarantee that mediation will succeed, especially if one party or the other refuses to cooperate or fully participate in the process. In cases like this, the grievance may need to be resolved by the courts. 

3. Take your case to court. 

The Small Claims Tribunals do not hear cases involving commercial lease disputes, even when the claims are fairly low. 

If your claim is for less than $60,000 you would file it in the Magistrate’s Court, but if your claim is for $60,000 up to $250,000 you would need to turn to the District Court. 

You May Want to Engage a Lawyer to Represent You in Court

Although there is no legal requirement in Singapore to have a lawyer represent you in court on your commercial lease dispute, certain types of grievances are very hard to resolve unless there is a serious threat of legal action. Engaging a lawyer to work on your behalf makes this a very credible threat. 

Furthermore, a lawyer can realistically evaluate your claim and advise you on how worthwhile it is to pursue. An experienced lawyer can explain the best options for recovering your losses. 

Disclaimer: The information provided in this article does not constitute legal advice. We recommend that you get the specific legal advice you need from an experienced attorney prior to taking any legal action. While we try our best to make sure that the information provided on our website is accurate, you take a risk by relying on it. 

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