Does A Tenant Has A Right To Occupy His/Her Rented Property Despite The Property Being Auctioned Off? 16th April 2021

When a tenant signs a tenancy agreement with the owner of the property, the tenancy agreement usually states the tenure of the tenancy. If the rental period is for 1 year, the tenant will be entitled to occupy the property up to full tenure of the property, provided there is he pays his rent on time and the agreement is not terminated earlier by the owner.

What if the property was charged to the bank by the owner who then defaults in his loan payment and the property was auctioned off by the bank? What happens when the tenant who occupies the property was not notified of the auction?

The tenancy agreement does not automatically terminate upon the property being auctioned off. Where the tenant was not notified of the auction by the owner, the tenancy agreement still stands despite the auction.

Section 7 of the Specific Relief Act 1950 states that where a person entitled to possession of the property is not at liberty to evict the tenant who continues to occupy the property otherwise than by an eviction proceeding in court. This means, the new owner who bought the property through auction, cannot simply resort to self-help such as change the lock or simply throw out the tenant’s belongings.

In circumstances like this, it is best that both the new owner and the tenant can sit down and negotiate for solutions before going for court proceedings. The new owner may opt to let the tenant finish his tenure under the tenancy agreement provided the rental is now paid to the new owner or terminate the tenancy amicably.

Contents in this article are intended to provide a summary or review of the subject matter and are not intended to be nor should it be relied upon as a substitution for legal or any professional advice. For more information, contact us at hhqkl@hhq.com.my or +60327103818.


Written by:
Tan Poh Yee
LL.B (Hons) University of East England, CLP
Team Lead
Learning & Development
pohyee.tan@hhq.com.my