Renting out a commercial property can be a smart and lucrative endeavor. Yet it is not without its risks as there may be times when a tenant fails to uphold the agreement in the lease. When this happens, you may consider your entitlement to terminate the lease and evict the tenant in order to regain control of your property and finances. Unfortunately doing so is anything but simple.
There are many circumstances that can end up leading to a breach in a commercial rental agreement. The most obvious is when the tenant fails to pay the rent as agreed. Other issues can include not keeping the property in good repair or failing to obtain the necessary insurance coverage as outlined and required by the lease. In some serious cases, tenants may be engaging in unauthorized or even illegal activity on the premises. Whatever the reason, evicting a tenant in breach of a commercial lease can be a lengthy and complicated process — one that must be undertaken carefully in order to avoid problems down the line.
As a general rule a property owner must first notify the tenant of the alleged breach and allow a period for remedying the breach. If the tenant fails to comply with the terms of the notice, then there may be grounds for formally ending the lease or approaching the Court for appropriate orders to re-enter and take back control of the property. In some cases, such as where there is a failure to pay rent, it may be possible to lock out the tenant but that must only be done on legal advice and in clear cases.
The key to a successful eviction is dependent upon having a well worded lease, facts giving rise to a breach, an appropriate notice and then formally ending the lease according to its terms. Failure to have any of these matters in place can have grave consequences for the property owner, including costly legal proceedings and potentially wrongful termination and damages. As a rule of thumb written notice must detail the specific breach, provide information on how the breach can be remedied, along with the provision of adequate time for the tenant to respond. It must also include other matters that include the name of the tenant, address of the property and date of notice (noting there may be other requirements). Delivery must be in accordance with the lease (or law) and often includes personal service but would typically not include text messaging.
If you end the lease without a proper legal basis, such as by failing to send the appropriate notice before terminating, then that can expose the property owner to great risks such as expensive legal costs and damages. Because each case is unique and the terms of the lease may require interpretation, it is important to seek professional legal advice from an experienced lawyer before terminating. Contact our commercial litigation lawyers for help regarding your commercial dispute. To book a consultation, call us at +61 2 8644 0663
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