We often have commercial and retail tenant clients approach us after their landlord has demanded they must immediately leave their retail premises. This often happens when their lease has ended (or is about to end) and there is no option to renew.
Not surprisingly, this comes at great stress for tenants who have been compliant, paid their rent on time and kept the premises in good condition. It is usually impossible for them to source, secure and relocate their business to alternate premises, and make good the current premises, on such little notice. The risk of loss and damage to their business and livelihood, to their employees and customers, can also be significant if re-entry occurs on such short notice.
In many instances, the landlord cannot demand that a tenant must immediately leave their premises. Under section 64 of the Retail Leases Act 2003 (the Act), a landlord must give their tenant at least 6 months’ notice (but not more than 12 months) of its intention to either bring the lease to an end or to offer the tenant a further option.
A surprising number of landlords and their managing agents are not aware of their obligation to provide a tenant with this type of notice under the Act. The consequence of a failure to provide it gives a tenant the right to effectively extend their tenancy for 6 months from the date that notice is given.
Another benefit to the tenant is that despite their tenancy being extended for 6 months, it can still terminate the lease at any time during these 6 months, usually on one months’ notice.
Furthermore, the landlord’s notice requirements are quite stringent and requires more than the landlord simply advising the tenant of its intentions. The landlord must provide all documentation relevant to the notice and strictly comply with all provisions of the Act. The notice must also be served properly.
Failure to comply will deem that notice has not been provided and the 6 months extension will continue until proper notice is given to the tenant.
If you are a commercial or retail tenant coming up to the end of the term of your lease, you may be able to rely on provisions of the Act to buy you further time in your premises. Alternatively, if you are a landlord you must comply with the Act if you wish to ensure your tenant leaves the premises at the end of the lease term.
If you have any queries about this article, please contact our team to discuss.
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