Has your Tenant breached their Commercial Lease? What to do!
Problem – you have a commercial tenant who is in breach of the lease. How to best deal with this?
This guide aims to provide landlords with a structured approach to handling a breach. The idea is to try to ensure any actions taken align with the law while maintaining a fair and equitable process which can stand up to any challenge. Whether the breach involves monetary or non-monetary aspects, landlords must navigate the complexities of the legal system to protect their rights and interests. You need to get this right.
So how do you go about this? Having a strategic mindset will help as will taking legal advice to ensure a well-reasoned step by step process is followed. The goal should not only be to rectify the breach, but also to ensure that any actions taken against you stand up to legal challenge if a tenant resists or wants to challenge the decisions you have made.
The steps – what are they?
1. Review the Lease Agreement:
- Carefully examine the lease agreement to understand the specific terms and conditions.
- Identify the nature of the breach and whether it falls under monetary or non-monetary violations.
2. Communicate with the Tenant:
- Open a line of communication with the tenant to discuss the alleged breach.
- Seek clarification and gather information to understand their perspective.
3. Document the Breach:
- Thoroughly document the breach, including dates, communication records, and any evidence supporting the claim.
- Ensure that all communications are in writing to create a clear record.
4. Consult your lawyers:
- Seek advice from your lawyer to ensure that your actions align with the applicable laws.
- Discuss potential courses of action and the legal implications of each.
5. Issue a Breach Notice:
- If the breach persists, issue a formal breach notice to the tenant.
- Specify the nature of the breach, provide a reasonable timeframe for rectification, and outline potential consequences for non-compliance.
6. Negotiate a Resolution:
- Encourage negotiations to resolve the matter amicably.
- Explore possible solutions such as rent adjustments, repairs, or modifications to the lease terms.
7. Consider Mediation:
- If negotiations stall, consider mediation as an alternative dispute resolution method.
- A neutral third party can help facilitate communication and reach a mutually agreeable solution.
8. Termination of Lease:
- If all else fails, and the breach remains unresolved, consider terminating the lease.
- Ensure compliance with notice periods and termination procedures outlined in the lease agreement.
9. Repossession of Premises:
- If termination is successful, follow legal procedures for repossession of the premises.
- This may involve obtaining a possession order from the relevant court.
10. Legal Action:
- If necessary, initiate legal proceedings to recover any outstanding amounts or damages.
- Provide all relevant documentation and evidence to support your case.
11. Mitigation of Loss:
- Take steps to mitigate any losses suffered as a result of the breach.
- Document these efforts for potential recovery during legal proceedings.
So there you go – a road map with the key steps. For most landlords this will thankfully never be necessary, but for those few that need assistance, do not panic, there is a process to follow, and our firm is well-equipped to assist landlords should the need arise.
This article provides general guidance and does not constitute legal advice. For personalised advice specific to your particular circumstances, it’s advisable to consult with legal professionals earlier rather than later. If you would like to discuss in more detail regarding how we can assist please contact either Nick Newbery on nick@corelegal.co.nz or Shannon Norling on shannon@corelegal.co.nz or book a free 30 minute consultation with us.
