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?

errr.... i think you better check back what TS wrote. I think TS replied there is a "3 months prior notice" to this effect.

like i said earlier, it's not about landlords being greedy assholes or tenants being sore losers, it's about improper drafted agreements by idiots which resulted in all these unnecessary disputes.

every clause must serve its purpose and not there just because it "has" to be there. people need to see the rationale behind it.

an agreement or contract is a mutual agreement between 2 parties. there is no trite law to say that parties cannot terminate without consequences but it must make sense. of course, TS made a mistake in trusting whoever drafted the agreement and signed the agreement without properly reading it first, that cannot be argued but i am just sadden by the fact that there are too many "pretending lawyers" in the society right now thinking they are qualified.

but of course, the outcome of the example you have cited is ridiculous because the example in itself is ridiculous. do you think a sane person would agree to a 1 month prior notice?

litigation exists because it is always arguable but let me reiterate, i am not here to argue against the landlord or for the tenant but rather on the subject matter which causes all these.

just a reminder to people to don't embark on drafting legal documents if the knowledge is sub-par.

if you are going to run a business, and cannot comprehend the importance of a legal document as an agreement, then you either not do it or get
a lawyer to explain to you.. TS seems to comprehend the English language quite well so ...

TS is better off going back to the landlord to try to renegotiate otherwise if the landlord decides to litigate , its going to be messy.

But to try to blame the agent or the landlord for drafting such a TA is ridiculous ..

Agreement - There is Offer and Acceptance...so totally legal.

FYI, residential TAs do provide for one month notice period so don't be silly ..am referring to TAs in general

its up to the signing parties to know what they are signing - how sure are you that it wasn't the landlord who drafted the agreement in the first place..

I guess there is no way in putting sense into you because truly, it can be deciphered that you have taken the position of the landlord rather than taking this entire matter objectively as a third person.

but let me just at least make my last attempt:-
1) signed documents are lazy people's argument into enforcing one's rights because clearly there is an assumption of law for that so yes, this is to the landlord;

2) one must not discount the fact that the tenant signed the document without reading but of course, taking into account item no. 1, the tenant cannot deny "not understanding the nature of its contents";

3) as you have already mentioned and I have also already mentioned, there are not 2 separate distinct matter but 2 separate matter to be read as a whole;

4) what is the rationale of serving notice when either way, the tenant will be penalized? let me give you an example so that you could better understand this - if you are served a summon for running the traffic light and in the summon, it says pays RM50 if settle within 7 days and pays RM100 if settle after 7 days, it gives you an incentive to settle within the first period BUT what if there is no difference in payment whether you settle within the first or second period? of course, you must take out that inner self good law abiding citizen character that you have in you;

5) the term "unscrupulous" can be defined and interpreted in many ways, for instance, deliberately taking advantage of someone else weakness? fraudsters always take advantage of their victims weak point. if you are dirt poor and people comes and convincingly offer you money, you will surely bite the bait despite needing to sacrificing something in advance. it's desperation that calls.

Yet again, (i do not know how many times I must repeat this), I am not challenging the validity of the agreement nor is picking sides, I'm picking on the fact that it is a badly drafted agreement. that's all hence i have no idea why there are white knights out to defend this "landlord" as we speak.

Has our society dipped to such a state where people is unable to not pick sides on a discussion?

It is almost sad to note.

why are you referring to general tenancy agreement when we are discussing this very specific tenancy agreement that TS has signed. at the very least, let's try to not derail this thread :haha:

my contention is this, if it is the landlord who drafted the agreement then more the reason to believed that the landlord wanted to take advantage of the tenant?

either way, there is no end to this because you have pick sides so no matter what is being thrown here into discussion, you will at attempt to rebut me.

point to note, this is not about you or me but TS and the agreement and since our "discussion" which you have derailed serves no purpose to TS or the issues that TS is facing, i guess i'll stop wasting time trying to make sense and focus on something more substantial.

cheers~

Does our society need to resort to arguing his way out against what he signed in black and white earlier with your own legal logic?

this is laughable...you are assuming that the tenant did not read the agreement just because he said so , and that is now a "fact"?

Don't forget we are only hearing from one side of the story..

Its just a discussion, so relax ..omg..

anyway, since you say its about TS not you or me (OMG really?lol ) was wondering, did you give any advice as to what TS should do now? Or you were too busy ranting away that you forgot?

there are no 'general clauses' such as 1 month notice for residential TA.

in fact there are no 'standard TA' terms and conditions. its up to both landlord n tenant to decide before signing.

those who will usually get caught is either one or both parties 'think' that everything is standard in TA and proceed to sign without reading, then once issues turn up things will start to get messy.

back to TS issue:-

you need to either

1. nego with landlord for settlement; or
2. find a new tenant to replace; or
3. just pack and leave (and see if landlord want to sue you in court for remaining unexpired term)

i dont see any other way out of it.

Wow didn't realise this topic escalated so quickly. Chill guys. It's my first time renting a commercial unit and I admit doing a few mistakes.
1. The business startup was quite messy as our partnership company was registered after we agreed to rent the shoplot. I agreed to use my name first since there's no company name. If we rented the shop using company name I'll be less worried

2. I didn't read the TA carefully. I went to their office to sign the 20+ page TA. I casually ask what if I want to stop renting before 2 years, and the staff just tell me you'll lose your deposit lo. So I didn't read much and apparently the person that I dealt with didn't read the TA as well.

I'm now trying to appeal to the landlord still hoping for the best. I do agree to most of the points you guys mentioned but let's not get heated la. Malaysia very hot d. Haha