If you are leasing commercial or retail premises for your business, you may be wondering whether your landlord has the right to lock you out of your premises. There are some circumstances under which your landlord may prevent you from accessing the premises. For example, if you are struggling to make rental payments. This article explains when your landlord has the right to lock you out of your premises.
What Does Your Lease Say?
Whenever a lease dispute arises, you should look at your lease document. Your lease sets out the rights and obligations that you and your landlord have agreed to. Many leases will provide the landlord with a right of re-entry if certain conditions are met. For example, if there is a term in your lease outlining a procedure for the landlord to deliver a notice of default or breach, then this must be complied with before the landlord can lock you out.
Have You Breached Your Lease?
If your landlord wants to evict you or lock you out of your property, they must do so lawfully. They may be committing offences such as trespass or breaching your right to quiet enjoyment of the premises if they do not follow the correct procedure. They may also be liable for common law damages for repudiation of the lease.
Each state and territory has its own requirements for lawfully re-entering the property. However, generally speaking, only one of the following must be satisfied:
- your lease includes a term, the breach of which triggers a right of re-entry or termination of the lease;
- the breach is a fundamental term of the lease; or
- you have repudiated the lease by your conduct.
When Does My Landlord Need to Give Notice?
Your landlord cannot simply lock you out of your property without providing you with notice first. In New South Wales (NSW) for example, there is a prescribed form in the Conveyancing Act that can be used. The landlord then needs to serve that notice to you. The notice should specify:
- the breach;
- whether the breach is capable of remedy, requiring you to remedy the breach;
- whether you are required to pay compensation, in the event the landlord is claiming compensation.
If your landlord fails to provide the requisite notice before enforcing a right of re-entry, you may bring an action against them and apply to the court for relief. This does not apply to re-entry, forfeiture or relief in cases of non-payment of rent. However, most leases will require the landlord to give notice for the non-payment of rent. Therefore, you should look through your lease to see if your landlord needs to give notice.
Once you have received a notice of default, you should try and remedy the breach within the allotted time frame on the notice. If you can do so, the landlord may not have a right to re-enter your premises and lock you out. This is your chance to get on top of the situation, so you can continue running your business.
What Happens if My Landlord Locks Me Out of My Property and My Stock Goes Off?
If you operate a restaurant or food wholesaling business, you may be worried about large quantities of stock going off if your landlord locks you out of your property. For example, if you operate a fish store and the landlord turns off your power, you may face substantial losses.
In a Queensland case, Curtin v Meadlow Holdings Pty Ltd, the tenant, who operated a snack bar, fell into arrears of payment of rent. The landlord gave adequate notice of termination by having a security guard deliver the notice to the tenant’s home. During the seven day notice period, the landlord turned off the power to the tenant’s refrigerators and cool room, which caused the refrigerated goods to perish. After the notice period, the landlord changed the locks to the premises.
However, there was a term of the lease that specified the tenant could remove removable fixtures, fittings and furnishings for seven days after the lease ended. The clause also stated that if the tenant did not remove this property, it would become the property of the landlord.
Ultimately, the court found that the tenant’s refrigerators were freestanding items and the landlord could not claim them. It also stated that the landlord had to prove their negligence did not cause the loss. The landlord was liable because they did not provide evidence on who turned off the power. This resulted in a substantial reduction in the landlord’s claim for arrears of rent.
Therefore, it is prudent that, if you have concerns about your stock, you check:
- the terms of your lease; and
- that your landlord does not engage in negligent behaviour.
If you are concerned about the landlord locking you out of your leased premises, you should ask yourself the following questions:
- Have you breached your lease? For your landlord to lock you out of your premises, you must have breached your lease;
- Have you checked your lease? What does your lease say about a right of re-entry and giving notice of default? You and your landlord must comply with the procedure set out in your lease;
- Have you been given notice? Usually, the landlord must give you notice under the lease or state legislation; and
- Can you remedy the breach? The notice may give you a time frame to remedy the breach. This is an opportunity for you to fix the breach and stay on the premises.
You may be wondering whether your landlord can lock you out of your premises. If the landlord chooses to do this, they must do so lawfully. Therefore, they need to follow the procedure set out in the lease or state legislation. Otherwise, you may have recourse against them. If you have any questions, contact LegalVision’s commercial leasing lawyers on 1300 544 755 or fill out the form on this page.
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