The Civil Code has specific provisions on the leasing of club premises, or każini as they are more commonly known, and such clubs benefit from special protection under the law. A particular entity can qualify as a club as long as it is duly registered as such with the Commissioner of Police.
The ‘Registration of Clubs Regulations’ in turn define a club as any building or part of a building used by an association of persons for their common resort. In other words, any premises used as a common meeting place for people with a common interest in any particular musical, philanthropic, social, sport, political or other entity can qualify as a club as long as it duly registered.
As with all other leases, any lease entered into after June 1, 1995, in respect of premises to be used as a club is regulated exclusively by the lease agreement and by the general provisions that regulate contracts of lease in the Civil Code. On the other hand, any lease predating June 1, 1995, continues to be regulated by the law and definitions in force prior to the said date. This effectively means that such leases are regulated almost exclusively by the law, not by the contract originally signed between the parties.
The infamous ‘Reletting of Urban Property (Regulation) Ordinance’ (Chapter 69 of the Laws of Malta) is therefore applicable to such leases.
The said ordinance defines a tenant, in the case of a club, as the person or persons who from time to time succeed in the management or direction thereof, and states that it shall not be lawful for the lessor of any premises, at the expiration of the period of tenancy to refuse the renewal of the lease or to raise the rent or impose new conditions for the renewal of the lease. Effectively, this renders such leases indefinite and makes it almost impossible for the lessor to ever regain the vacant possession of his property or even to raise the rent.
In 2009, Article 1531J was introduced in the Civil Code stating that notwithstanding the provisions of the law in force before June 1, 1995, the minister responsible for accommodation may make regulations to regulate the conditions of lease of clubs so that a fair balance may be reached between the rights of the lessor, the tenant and the public interest.
Following a five-year interlude, the ‘Conditions Regulating the Lease of Clubs Regulations’ were finally introduced in 2014. The said regulations stipulate first and foremost that as from the date of the first payment of rent due after January 1, 2014, the rent is to be increased by a fixed rate of 10 per cent over the rent payable in respect of the previous year and shall continue to be so increased as from the date of the first payment of rent due after January 1 of each year until and including the year 2016 by 10 per cent over the previous rent.
Subsequently, the rent as from the first payment of rent due after January 1, 2017, shall be increased by a fixed rate of five per cent over the rent payable in 2016. Such rent shall continue to be increased by five per cent per annum until the December 31, 2023, and the rent shall thereafter increase every year according to the inflation index.
The more important feature of the said regulations is that they entitle the landlord to request an additional sum equivalent to five per cent of the annual income derived by the club from any economic activity conducted within the premises, excluding any income derived from fundraising or philanthropic activities organised and managed by the club itself.
Recently, Act XXVII of 2018 introduced a number of new provisions which further protect the sitting tenant. Article 1531J(2) now states that where the eviction of a band club (as opposed to other types of clubs) has been ordered by a final judgment, for a reason other than the failure to pay rent due, the said club shall still be entitled to continue occupying the premises under a title of lease, and this as long as such band club would have been in existence for at least 30 years as at March 1, 2018, and as at the same date would have occupied the said premises as its principal quarters under a title of lease or emphyteusis or under a combination of both for a period of at least 30 years.
In such a case, the rent shall amount to 10 times the amount of rent payable prior to the final judgment ordering eviction. However, the said rent is capped at a maximum of one per cent of the market value of the premises but shall in no case be less than €5,000 per annum.
Karl Micallef is a junior associate at Fenech & Fenech Advocates specialising in property law and litigation. This article is not intended to offer professional advice.