As a tenant of a commercial lease, you may wonder what you should do if your landlord breaches the lease. If your landlord continually refuses to perform the obligations of the lease, it is possible that:

This article will explain what repudiation of a lease means and will provide examples of what this may look like in real life.

What is Repudiation of a Lease?

Repudiation involves one party refusing to perform their responsibilities under the lease. This refusal is more than a landlord breaching a clause in a lease. Essentially, they must be denying the existence of the lease. This can happen when a landlord completely abandons the lease or refuses to fulfil their essential obligations under the lease. As the tenant, if you can prove this, you may have a right to seek damages under the lease.

It is best to have a repudiation clause in your lease. This will outline which clauses will lead to repudiation if breached. A repudiation clause makes it very clear for you to determine whether the landlord has repudiated the lease, as you can refer to the clause to see whether they have breached a particular obligation.

What Do You Have to Prove?

Deciding whether repudiation has occurred is a question of fact. This means that you cannot rely on the landlord’s state of mind or what you think their intention is.

You must be able to show that the landlord’s conduct demonstrates their lack of intention to be bound by the lease. Alternatively, their conduct can show that they will only comply with the lease in a very inconsistent way.

If you are trying to terminate based on the landlord’s repudiation, you must also be able to show that you are ready and willing to perform the lease.

Landlord’s Actions That Result in Repudiation

Some examples of conduct by a landlord that can lead to repudiation include:

  1. refusing to make structural repairs;
  2. unauthorised entry to the property;
  3. not paying outgoings; and
  4. not providing tax invoices for Goods and Services Tax (GST).

To prove repudiation, you will likely need to show multiple instances of this type of behaviour and not an isolated event.

1. Refusing to Make Structural Repairs

Usually, it is the landlord’s responsibility to make structural repairs. This could include repairing the roof, windows or flooring.

If you have asked the landlord to repair something numerous times and they continue to refuse, this may be a repudiation. This is particularly relevant when you depend on the repairs to be able to use the property, and you cannot operate your business without them.

For example, the roof of the café that you are leasing begins leaking. You have requested that the landlord repair the leak as soon as possible. In the time that you are waiting for the repair, you close the café to ensure that the safety of your staff and customers is not compromised. While you are closed, you are not earning any revenue. In this case, you need the landlord to fix the roof so that you can continue to operate your business. If the landlord continually refuses to repair the roof, then you will no longer be able to use the property. Here, the landlord may be repudiating the lease.

In a situation like this, it is essential to make all repair requests in writing, as you can use this as evidence if the need arises.

2. Entering the Property When They Are Unauthorised

Your lease should contain a clause that gives you a right to quiet enjoyment. This means that you have exclusive use and occupation of the property. However, the lease will also contain a clause that allows the landlord to enter the property in certain circumstances. For examples, the landlord can often enter the property to check on recent repairs.

If the landlord is visiting for unauthorised reasons, they may be:

  • interfering with your use of the property; and
  • denying you the right to quiet enjoyment.

For example, in a recent case, a landlord was found to be denying a tenant’s right to enjoyment when they filmed the tenants inside the property. The landlord also tried to break into the property to change the locks.

If your landlord is making intrusive and unauthorised visits, you should document the following in writing:

  • each visit;
  • the reason for it; and
  • what was said by you and by the landlord.

3. Not Paying Outgoings

Outgoings are necessary costs for a property and can include:

  • council and water rates;
  • taxes;
  • utilities; and
  • maintenance.

Typically, the:

  • landlord pays the outgoings for the property; and
  • tenant reimburses them.

If the landlord does not pay the outgoings for the building, the tenant may not be able to operate their business.

For example, you are leasing a café where the landlord is not paying the water rates. The council will eventually disconnect the water, leaving you incapable of operating your business.

4. Not Providing Tax Invoices for GST

If you are paying GST to the landlord, they must provide you with tax invoices. There is likely a clause in your lease that deals with GST.

Some clauses state that you do not have to pay GST before receiving a tax invoice for the amount. If you are not receiving tax invoices, the landlord will likely be breaching this clause.

What Do I Do if I Believe My Landlord Has Repudiated the Lease?

First, you must consider whether the landlord has actually repudiated the lease. Their actions may only amount to a breach of one obligation or clause in the lease. If so, this will not be strong enough to establish repudiation.

Repudiation is a serious matter, meaning that you must have strong evidence of it to seek damages.

Key Takeaways

To prove that your landlord has repudiated the lease, you must be able to show conduct that demonstrates they have:

  • abandoned the lease; or
  • refuse to comply with most of their obligations.

If you can prove this, then you may have a right to damages. However, this may be risky and time-consuming. In some circumstances, it may be easier to terminate the lease. If you have any questions, contact LegalVision’s leasing lawyers on 1300 544 755 or fill out the form on this page.

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