The Eviction of Statutory Tenants Due to Demolition: Legislation and Case Law

The eviction of statutory tenants due to demolition is a significant and complex legal issue governed by the provisions of the Rent Control Law, Law 23/83, and the corresponding case law.

Legal Framework

According to Article 11(1)(h)(i) of Law 23/83, one of the lawful grounds for evicting statutory tenants is the necessity of demolishing the property, provided certain conditions are met. The court must establish that:

1. The landlord has obtained the necessary demolition permits.
2. A written notice of at least four months has been given to the tenant.
3. The recovery of possession of the property is essential for demolition.
4. The eviction is reasonable and does not constitute an abuse of rights.

What Needs to Be Proven for Demolition

The justification for demolition requires substantiation at both legal and practical levels. The court will examine the following:

• Purpose of Demolition: The landlord must prove that the demolition is not for abusive reasons but for a specific purpose, such as reconstruction or substantial redevelopment of the property.
• Reasonableness of the Request: According to case law, the landlord’s request must be objectively reasonable and not merely driven by personal or business interests.
• Approval of Permits: The submission of approved demolition permits from the relevant authorities is necessary to validate the legality of the eviction.

Compensation and Calculation of Goodwill

The Rent Control Law provides for compensation of up to 18 months’ rent for the tenant in cases of eviction due to demolition. In the case Nicolaides v. Chrysochou (1988) 1 C.L.R. 687, it was confirmed that the 'reasonable requirement' pertains exclusively to the necessity of recovering possession by the landlord and is not linked to other factors.

Regarding commercial goodwill, Article 13 of the Law allows the court to award additional compensation to the tenant. However, in the case Kosmos Ltd. v. Filaktou Ltd. (1992) 1(B) A.A.D. 1086, it was ruled that goodwill must be specifically proven through expert testimony and must be directly linked to the property.

How Goodwill is Calculated

To qualify for goodwill compensation, the following must be substantiated:

• Increase in Property Value: If the property has gained commercial goodwill due to the tenant’s business activities, this must be demonstrated through an appraisal of its rental value before and after business operations.
• Expert Valuation: Case law requires expert assessments to determine the valuation of goodwill.
• Distinction Between Inherent and Adherent Goodwill: Inherent goodwill (value derived from the location itself) is not compensable, whereas adherent goodwill (value created by the tenant’s business operations) may be subject to compensation.

Conclusion

The case law surrounding eviction due to demolition highlights the importance of complying with legislative requirements and objectively assessing the landlord’s request. Landlords seeking to reclaim properties for demolition must ensure full compliance with the law, while tenants have the right to compensation of up to 18 months’ rent. Furthermore, tenants may claim additional compensation if they can prove that the standard 18-month compensation is insufficient and that they have generated commercial goodwill attached to the specific property.

For more details or advice regarding the eviction of tenants in Cyprus, contact Phoebus, Christos Clerides & Associates LLC at con.clerides@clerideslegal.com