The answer depends, to a large degree, on the terms of the lease and potentially the application of any retail lease legislation.

Simply leaving the leased premises, may not, in and of itself, result in a breach of the lease if, for example, the tenant continues to meet its obligations under the lease. If they continue to pay the rates and rent to the landlord without ever falling into arrears, there might be no reason to call your commercial leasing solicitor for help.

In what circumstances must a tenant notify the landlord of their intention to vacate the premises?

Some lease agreements, however, include provisions that prevent the tenant from doing certain things, such as leaving the premises vacant for a certain period of time. In some commercial leases, this kind of conduct can result in the tenant being in breach of the lease, allowing the landlord to take action under the lease, including (in some instances) terminating the lease and recovering loss. This might seem like an unfair term to include in a commercial lease but tenants and landlords are normally within their rights when drafting these sorts of terms.

On top of that, even if you do give notification to the landlord, a tenant can still be in breach of the lease if it does not seek the landlord’s consent to the vacation! This might seem like a bizarre requirement; that the landlord be notified when, and for how long, you leave, although, for many landlords, this is a security concern, as well as a financial one.

If the tenant (without the landlord’s consent) vacates the premises and ceases to comply with its obligations under the lease (and the lease is governed by the standard Law Institute of Victoria (November 2012 revision)), the landlord can terminate the lease by re-entry or notice of termination.

‘Re-entry’ and ‘Notice of termination’

  • Re-entry involves the landlord taking back possession of the premises, following some breach of the lease agreement; and
  • Notice of termination is a notice given to the tenants, alerting them of the landlord’s intention to end the agreement and recover any losses (rent or otherwise).

If your landlord has re-entered the property or delivered you a notice of termination, you should get independent legal advice from a commercial leasing solicitor to protect both yours and your business’ interests.

What else can the landlord do if the tenant fails to notify the landlord of a vacation?

In addition to termination, the landlord retains the right to sue the tenant for any unpaid money or for damages for breaches of the tenant’s obligations under the lease. The landlord, in this instance, is also entitled to call upon any security deposit or bank guarantee that has been provided to the landlord by the tenant under the lease. Any personal guarantee and indemnity that the tenant has provided could also be used by the landlord, as permitted under the terms of the lease.Again, if you don’t know what your rights or responsibilities are as a tenant, contact a commercial leasing lawyer and have them review your contract and advise you accordingly.

Conclusion

If your landlord has notified you of his or her intention to replace you as tenant and terminate the lease agreement, contact LegalVision on 1300 544 755 to speak with one of our experienced commercial leasing solicitors.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Lachlan McKnight

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