Commercial property: My tenant hasn’t paid!

Recently the DE team were contacted by a client who is a commercial landlord, enquiring about a default by his tenant on rental payments.

Recently the DE team were contacted by a client who is a commercial landlord, enquiring about a default by his tenant on rental payments. Our client was unsure what to do, asking;

“How do I get rid of a troublesome commercial tenant who keeps defaulting on rental payments? I have been more than patient with the tenant but the empty promises and continual defaults are leaving me very frustrated. What are my legal rights?”

Solution:

If a landlord is of a view that a tenant has breached a lease, the landlord may issue a notice of default to the tenant. A notice of default is often given to a tenant for non-payment of rent.

The process for issuing a notice of default will usually be contained in the lease. It is important that the tenant be given proper notice in accordance with the lease and s 146 of the Property Law Act 1958 (the Act). In other words, the notice should strictly comply with the Act and terms of the lease.

A defective notice may render any subsequent re-entry unlawful (and with costs consequences). The notice should provide the tenant the opportunity to remedy the breach of the lease and advise of the consequences of failing to do so, otherwise, the landlord may lawfully re-enter the property to take possession.

If the breach is not remedied by the tenant within 14 days (or another time period reflected in the lease), the landlord is then entitled to terminate the lease, state that the lease is at an end and confirm the date from which termination takes effect. The landlord must then make an unequivocal demand for possession of the property and is faced with two choices, either to effect re-entry themselves with the assistance of a locksmith, or seek an order for possession from a court or tribunal.

If an eviction proceeds unlawfully as a result of a defective notice, the landlord may become liable to the tenant for any losses incurred by the tenant in the failed exercise. This may have significant and adverse financial consequences for a landlord.

If you are considering terminating a commercial lease due a default by a tenant, contact Steven Dangerfield, Angela Catanzariti or Lynda Lim of Dangerfield Exley Lawyers for a frank discussion on your legal rights.

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