Legal Updates

Lessor of a property which construction is unfinished need truly report the lessee the forecast of completion of construction

November 16, 2017

A lessee in a commercial center terminated the lease agreement after the lessor was late to hand over possession of the rented property in lack of receipt of “Form 4” (occupancy approval). The lessor claimed that the delay in handing over the rented property was out of its control.

The Court held that granting of “Form 4” was a precondition for handing over the possession in the rented property to the lessee and therefore the lessee was entitled to terminate the agreement when it was not received. The lessor gave the lessee the feeling that completion of construction was expected to be within a short period of time and insisted on receiving the full rent which was an act in lack of good faith as it contradicted the legitimate expectation of a lessee to know the real date at which one may commence using of the property, especially when this was a business lease.