Can a Landlord’s Breach End a Commercial Lease?

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Table of Contents

• Has the Commercial Landlord Breached the Agreement?
• Does the Lease Agreement Contain Breach and Termination Provisions? 
• Have You Given the Landlord a Reasonable Opportunity to Remedy the Breach?
• Have You Negotiated With the Landlord?
• Key Takeaways

You may find yourself in a commercial lease where your landlord is engaging in conduct that you are not happy with. In some circumstances, a landlord’s conduct may amount to a breach of either the lease agreement or leasing law. This article will examine some of the circumstances where a landlord’s conduct will allow you to take steps to terminate your lease agreement and what steps this could entail. 

Has the Commercial Landlord Breached the Agreement?

Your first step should always be to check your lease agreement. You and your landlord will likely have a number of obligations under your lease agreement. Some of the commonly found landlord’s obligations in commercial lease agreements can include:

• maintaining and repairing any common areas of the building and major structural elements such as roofs or joints; 
• paying rates or body corporate fees; and
• obtaining insurance and council permits for the property.

You should also consider whether you have a retail lease. Retail leases are governed by state law and may carry further legal obligations on both parties. 

Does the Lease Agreement Contain Breach and Termination Provisions? 

Check the surrounding terms of the provisions in your lease agreement. Some provisions of the lease may state that a failure to comply with a particular provision will result in a fundamental breach of the agreement. 

Your lease may also include provisions about terminating the agreement. Typically, they may take the form of:

• early termination clause;
• breach of agreement clause;
• mutual consent clause; or
• lease term expiry clause.

You should consider the termination provisions carefully. Some may allow you to terminate the lease agreement without having to identify a breach of the agreement. Others will require negotiation and consent from the landlord. We recommend obtaining advice in relation to properly terminating lease agreements, as a failure to go through this process correctly may result in you demonstrating that you are repudiating the contract. 

Have You Given the Landlord a Reasonable Opportunity to Remedy the Breach?

Some provisions in the lease agreement may also describe a process that you need to follow after the breach before the lease agreement can be terminated. For example, it is typical for a breach provision to include a remedy clause. This means that if a landlord breaches a provision, a tenant needs to give notice of the breach and provide a reasonable opportunity for the landlord to remedy the breach.

It is always important to follow the process outlined in your lease agreement. If you fail to do so, you may not form the proper grounds that would entitle you to terminate the lease agreement.

Have You Negotiated With the Landlord?

The problems that you are experiencing could be alleviated through direct but informal discussions. This option should generally be taken as a preliminary step. You may also be able to obtain context to your landlord’s conduct or come towards a mutual understanding.

If you agree with your landlord, consider formalising your negotiations through either a deed or a supplementary document to your lease. This helps to avoid future disputes and build a better relationship between you and your landlord.

How to End a Lease Factsheet

A factsheet that sets out the three ways to end a commercial lease in Australia: surrendering your lease, assigning it or subletting it.

Download Now

Key Takeaways

Relationships between landlords and tenants can very quickly become tenuous. If you start to become dissatisfied or unhappy with your landlord, you should consider your options. Understanding your and your landlord’s obligations under the lease agreement is an essential step to resolving disputes. 

If you need help understanding whether you can terminate your commercial lease agreement, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.