Insight into the Residential Tenancies Law 2009

The Cayman Islands has a large residential rental property market that provides an important source of income for many of the Islands’ residents and investors. Due to recent media exposure, everyone is no doubt well aware of the current state of the rental market, with rents having taken a significant decrease over the last months.

What a lot of people may not be aware of, is the introduction of the new Residential Tenancies Law 2009. Richard Sykes, partner with Cayman Law Associates reports.

The law was drafted in order to address various concerns such as: the sudden and large increases in rents following Hurricane Ivan, the purported refusal of landlords to return security deposits to tenants in some cases and the protection of tenants against unlawful eviction and harassment by landlords.

The law is not yet in force as it awaits a commencement order; however, the content of the law has now been finalised. Below, we examine the new law and take a look at the various issues that now need to be considered by both landlords and tenants.

The law will apply to the letting of all residential premises. There are certain exclusions such as service tenancies and commercial properties.

All leases will need to be in writing and signed by both the landlord and tenant. Where a property is currently let on a verbal tenancy, these will need to be put in writing. Every lease will need to contain various basic details of the letting.

A new residential tenancies commissioner is to be appointed by the Governor to mediate disputes between landlords and tenants. Either a landlord or a tenant will have the right to apply to this commissioner for mediation. It is understood that the commissioner will also seek to create a standard form of lease that can be put in place. Bearing in mind the differing standards and types of properties in Cayman and also considering that, for strata properties, no two sets of bylaws tend to be the same, this is going to be a difficult proposition for the commissioner.

Security deposits will need to be held by the landlord in trust for the tenant, at a Class A bank, with details of the account being provided to the tenant. 

Where a property is furnished, a new form of inspection sheet will be used to detail the contents and their current condition. This form is then used again at the end of the lease as a comparison in order to assess any possible damage and claim. There is a new procedure for dealing with claims for damage with the commissioner able to mediate in the event of a dispute.

Tenants are permitted, with the landlord’s consent, to transfer, underlet or charge the lease. As the landlord’s consent must not be unreasonably withheld, it is important to agree how any transfers or underleases are dealt with. If a lease is transferred to a third party, the original tenant is no longer liable to the landlord. Therefore the parties will need to ensure that the new tenant will be bound by and be able to rely on the lease terms.

Landlords must provide tenants with premises that are in habitable condition. A tenant may be able to forfeit the lease and seek compensation from their landlord where premises fall into disrepair.

Rent is not able to be increased within a year of the start of the lease or within a year of the last increase. However there will be no limits on how much the rent can be increased by.

Where a tenant has refused to leave the property and has stopped paying rent, the landlord will need to obtain a Court order for possession. There are strict penalties should a landlord threaten or use violence against the tenant in order to recover possession.

The law also provides for how abandoned chattels are to be dealt with. For items of value, a landlord is obliged to store these and then may be required to sell them at a public auction.

From a landlord’s point of view, your current form of lease will need to be carefully reviewed in order to ensure compliance with the law. There are also various time limits and procedural issues that need to be complied with.

From a tenant’s perspective, you should ensure that your lease complies with the law and that you are aware of your legal rights and remedies.

As can be seen from the above, the law will bring in some major changes to the current practice and the issues need to be carefully considered by both landlords and tenants. These changes will no doubt mean increased costs for landlords however this is balanced with the increased tenant protection provided.

RichardSykesMP

Richard Sykes

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