I rented a shoplot for retail business and after about 6 months every month is just losing money. The total sales is unable to cover the rental and employee salary.

So we decided to close the business. However after informing the landlord that we want to stop the rental, the landlord showed us that there was a clause saying we have to pay for the rest of the tenure if we choose to terminate the agreement early. I admit it's my bad for not reading the agreement carefully before signing it. Now they insist we have to pay the rest of the 2 year tenure or get a new tenant.

Anyone experienced this before? What's the solution?

If there is a black and white clause written you are to pay for the full tenancy, there is no easy solution.

It is an expensive mistake not to read through the draft of the TA when presented to you. The law will always uphold this clause and he can easily sue you.

Best solution, speak nicely to the owner for a settlement. If the owner is a hardnut, bad luck. Or just as he said, find a tenant to replace your business.

Good luck

Surely you didn't expect to break even after just six months?

Well established business or what?

Haih. Thanks for the info. I took for granted and thought normally rental agreements are almost the same. If we quit they'll just take the deposit.

Not break even but just didn't expect to lose that much cos there were many days that sales was zero or single digit.

It's kinda like a start-up

I am not advocating this but quite a few of my tenants just terminated even with the same clause in the TAs -
I personally cant be bothered to go after them as its costly and time consuming - just forfeit deposits and look for tenant myself..

Yup it'll be costly for the landlord to enforce the agreement too.

Ya we didn't expect for the sales to be so bad. There were quite many days having 0 sales. And the condition of the shop is also quite poor. The roof leaks during rain and when I inform the management they just come and use silicone to seal the holes in the roof. They walls even grew mould cos there's a big gap at the wall allowing water to sip in. I told the management a few times but nothing is done

The property is owned by a foreign company and they assigned a local management company to manage it. I'm worried if any legal action will be taken against me

what biz are u running? retail need aggressive marketing to pull traffic from all places, if you make money for first 6 mths, there is no reasons why you should just give up like that.

You are dealing with foreign landlord, if company likely to execute the black and white, so you are better off the focus to turn around your biz instead of giving up.

Peruse through the agreement again, does it contained any clause which requires a prior notice for termination? Some standard agreement does comes with it. Upon the service of prior notice, all the deposits are refunded.

Some landlords are "threatening" in nature, they threatened but in order to enforce it, they will need to go through the legal process which is quite tedious. Try to talk nicely with the landlord and gain his empathy. You'll be surprised how sympathetic people can be when they truly understand you nature.

Most importantly, forget your ego and don't be prideful during the negotiation.

By the way, are you renting it under a "Sdn Bhd" or individual?

Selling Japanese goods. Nope we didn't make money at all for first 6 months, every month need to top up to cover overhead. We thought about trying to hold on but it's quite a big gamble to take since the past 6 months have all been losses.


This is part of the termination or break option as per the agreement.

Break Option which states that you are liable to pay a
sum equivalent to the rental for the remaining term of the lease subject to a maximum of 18 months rental plus 3 months rental in lieu of notice.

Notice to give is 3 months but that is followed by the clause above. Ya I've tried to explain nicely to the landlord, apologising and saying we're unable to continue as business is very bad. Hope they have mercy on me.

The business is under partnership but the tenancy is under my single name. That's the part I'm worried.

That's a very poorly drafted agreement isn't it? The purpose of prior notice to terminate is so that the landlord can find time to search for a new tenant and without the need to penalize the current tenant.

What is the point of serving prior notice and upon expiry of the notice, still have the tenant's deposit forfeited and then need to pay rental for all the unexpired term?

Which idiot drafted the agreement?

Exactly. I asked around some people who have law background and they said the agreement looked ridiculous. I'm not sure the company who owns the property did it or the secretarial firm they appointed drafted it.

I informed them I admit not reading the agreement carefully before signing it because when I asked about termination, they just told me it's a standard agreement, you'll lose your deposit. Now waiting for their reply.

one paying for opportunity cost, another one paying for agency/transition/admin fee.

yes, that is correct..

usually it works both ways - the landlord is not allowed to terminate nor increase rental during the
tenure of the tenancy. If the landlord terminates , then he has to pay compensation also based on the unexpired
period of tenancy to tenant.

So tenant likewise is not allowed to terminate without compensation for the unexpired period of tenancy. Nevertheless
if the landlord succeeds in finding a replacement tenant, the tenant will not be liable to pay for the remaining tenancy minus costs.

In reality , if tenant terminates before expiry, the owner usually just forfeit the deposits , lick his/her wounds and just move on lah..

Infuture do READ and UNDERSTAND what you are signing - signing blindly is no excuse under the law..its a legal document.

the rationale is legally and common-sense flawed in every aspect.

The forfeiture and penalty is true if either parties terminate the agreement without prior notice since it constitutes an "unfair" breach by giving parties no time to remedy BUT if there is a prior notice then it makes absolutely no sense.

If either way, the parties are going to forfeit and penalize the other irrespective of the prior notice then why compel the parties to an extra obligation? Might as well just drop the bomb and go.

There is a reason for the prior notice and not just "by the way".

But it is a good experience to TS though since now he is going to be super meticulous and careful on all documents he is going to sign. Whatever it is, I do hope the landlord refunds to TS the deposits and stuffs and stop threatening to sue since it is basically useless to sue anyway. The reason why you are leaving the premise is because you earn insufficiently, suing is a waste of time, costs and money.

if unfair the tenant won't sign in the first place, how is it fair at the point of signing and not fair when things are not in his favor?

notice period and minimum occupancy promised are 2 diff things, both are obligation to fulfill.

if you read back TS's grounds of argument, he is a lay person so he may not necessarily be well versed when it comes to tenancy agreement and since his business is suffering, i assumed safely that this is his first time renting a commercial unit?

further, he may be persuaded to sign the agreement by the agents or something like that. who knows?

if you look at the issue as a whole, both are not distinct and separate but rather to be read together.

my question is this, if you have the answer; why put in a clause for prior notice of termination when either way, the deposit is going to be forfeited and the tenant will be penalized by the landlord?

interpreting this, whether a prior notice is served or not, there is only one outcome for the tenant.

if you can agree with me on this then comes the second question; what compels then for the tenant to serve the prior notice (which is an redundant obligation which serves no purpose?).

the crux of the matter is not whether the landlord is being unscrupulous or the tenant is trying to get out of a bad bargain but on the issue that whoever drafting the agreement should be shot and killed.

This post has been edited by shaniandras2787: Oct 31 2017, 11:58 AM

In the first place. there is no provision for prior notice to be provided for either side as the intention is to bind both parties during the tenure of the agreement as agreed by both parties.
- otherwise why even bother putting the tenure - just put in the notice to terminate without consequences.. But in TS's case, its a bit weird in the sense that he has to give prior notice and then still be liable for the rest of the tenancy. this is one sided.

In such a scenario, if I rent place and prior notice to be given for termination is just one month -, I can just rent for one month, give one month notice and off I go
without any penalty. This is utterly ridiculous and its not a practice for residential let alone commercial.

As with all tenancy agreements, read the clauses and if you don't agree just walk away . if you sign, then you are bound by it - its as simple as that.
Don't blame the landlord or owners for one sided agreements after the fact.

This post has been edited by nookie188: Oct 31 2017, 12:02 PM

exactly who knows? that's why black and white signed by consenting adults is a better yardstick.

already mentioned the different notice period and minimum occupancy, both serving different purpose. From tenant POV it's a subset, from landlord POV it covers 2 concerns as already mentioned.

how would you describe someone as "unscrupulous" when it's a legitimate document?