The Private Residential Leases Act (PRLA) obliges landlords to register the rental contract within 10 days from the signing of the contract and failure to do so will result in an offence. Four years after the introduction of the PRLA, the Housing Authority, as the regulator of the private rental market in Malta, has published a study to examine how the Court of Magistrates (CoM) was dealing with cases of non-registration of leases.

Since 2020, a total of 78 complaints were made by the Housing Authority to the Police regarding  non-registered leases. Of these, 22 cases were decided. Despite this being a relatively low number, it was possible to examine certain common elements that resulted from these judgments, including the level of proof required, the nature of the offence, timing, the validity of contracts and the punishment awarded.

The legal effect of a contract

An interesting, albeit controversial, point that was delt with by the Courts was the legal effect of a lease agreement. In Pulizija v Ruth Galea Vella, the CoM went beyond its competence by delving into the merit of whether the contract itself was null and void in civil terms. In this case, the Court established that, since the law provides that where a lease contract is not registered it is null and void, then the accused cannot be condemned guilty of failing to register a lease agreement which was null. This conclusion risks allowing a lessor to intentionally create an agreement that is not registerable at all, thus being exonerated from any legal consequences as a result of non-registration.

Dr Bryony Balzia Bartolo

Contrarily, in other judgments the CoM concluded that it cannot delve into the validity or otherwise of the lease agreement, since the competence of the CoM in such cases is to decide whether the lease agreement was registered or not. In Pulizija v Sacha Said, the CoM went even further and described the defence counsel’s pleas as a fallacious argument since the obligation to register the lease agreement falls on the landlord. Even when the tenant registers the contract, it is done at the expense of the landlord. The Court also differentiated between the civil action and the criminal action. That is, when a lease is not registered it is considered as null and void, which is a civil consequence but failure to register such a lease in itself leads to a criminal action and civil consequences.

Level of proof

Considering that the non-registration of a lease by the lessor gives rise to a criminal offence, the prosecution must provide evidence beyond any reasonable doubt that the landlord failed to register the lease. The study identified some facts that are crucial for the Court to establish that the lessor is guilty of not registering a lease. For instance, the testimony of the tenant is required to confirm the identity of the landlord, the existence of a lease agreement and the actual payment of rent by the lessee to the lessor. These are deemed very important elements because, in case of doubt whether a lessee-lessor relationship exists, the doubt goes in favour of the accused, in line with the general maxim “in dubio pro reo”.

Strict liability

The CoM has established that the offence of non-registration of a lease is an offence of a strict liability nature. This means that the mere non-registration of a lease is sufficient to prove the offence, irrespective of the intent of the lessor. Therefore, even if the lessor was compliant with his tax obligations on the rent received, the mere fact that the lease was not registered is still tantamount to an offence.

Prescription

The Court classified the offence of non-registration as a continuing offence. Therefore, where the identity of the offender is known, prescription starts to lapse from the day when the “continuance ceased”, that is, from when the lessor registers such lease agreement. However, where the offender is unknown, the period of prescription in respect of crimes shall not commence to run until the identity of the offender is known.

Dr Brian Micallef, Executive Head of Policy at the Housing Authority.

Fines for the accused

For non-registration of leases, the law establishes a fine ranging from €2,500 to €10,000. The Court rarely exceeded the minimum fine and, when it did so, it condemned the accused to pay a fine of €3,000. This stance, adopted by the Court, is mainly a result of a lot of admissions by the accused who failed to register the lease agreement. However, it is also possible that the Court does not consider this crime as being a grave criminal offence, hence its decision to go for the minimum penalty.

Limited Right of the Attorney General (AG) to appeal       

In Pulizija v Wayne Lee Mario Cassar, the AG’s appeal was dismissed on the grounds that, essentially it was an appeal claiming an incorrect appreciation of the facts by the CoM, which is not listed as a ground of appeal in Article 413(b) of the Criminal Code.  

This analysis made it possible for the legislator to address some of the substantive and procedural deficiencies in the Act. Indeed, the bill currently being debated before Parliament amending the Private Residential Leases Act is proposing a number of amendments that would, for instance, eliminate the possibility of landlords being acquitted by making the argument that their draft agreements lacked certain constitutive elements while extending the right to appeal to the Attorney General.

Dr Bryony Balzia Bartolo is the Manager of the Legal Office of the Housing Authority. The study mentioned in the article was co-authored by Dr Kurt Xerri, Dr Bryony Balzia Bartolo and Dr Stefan Cutajar. It is available from the Housing Authority’s website.