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As a landlord, you may have the right to terminate a lease agreement if the tenant fails to uphold their obligations. However, you need to take steps to ensure that you are validly terminating the lease agreement. This article explains the various breaches that can give you grounds to terminate the lease agreement and the additional steps you will need to take to evict the tenant. 

Has the Tenant Breached the Lease Agreement?

You will need to first establish if the conduct by the tenant has breached the lease agreement in a significant or substantial way. This will depend on the terms of the lease and on any relevant legislation if the lease is covered by retail leasing laws in your state. 

Does the Lease Have a Breach Clause?

Generally, the lease will have clauses that specify when a tenant will be in breach of the agreement. These breaches include ‘defaults’, when referring to non-payment of money owed under the lease. The lease will also include terms that cover whether a breach may give you grounds to terminate the agreement. 

For example, a lease may say that the tenant is in default if they do not pay the rent within 14 days of the due date.

Sometimes the conduct is referred to as an ‘event of default’. This covers situations in which the tenant has not directly engaged in conduct, but their status has rendered them no longer able to remain under the agreement. For example, if the tenant is a corporation and goes into liquidation.

What if the Lease Does Not Contain a Breach Clause?

A tenant may still have engaged in conduct that gives rise to a right for the landlord to terminate the lease:

1. If the tenant breaches a fundamental term of the lease

Fundamental or essential terms are terms that go to the heart of the contract and would form the basis of the relationship between you and the tenant. An example of a fundamental term would be the payment of rent. 

2. If the tenant’s conduct evidences a repudiation of the lease agreement

If a tenant has indicated through their conduct that they are no longer willing to be bound by the agreement, this may also give you grounds to terminate. For example, after signing the agreement, a tenant has failed to move into the premises and pay rent for a significant period of time. 

Can I Still Terminate a Lease if the Tenant Has Not Breached the Agreement?

There are various ways you can terminate a lease agreement without establishing a breach by the tenant. However, most of these methods require consent by the tenant or adequate notice to be given. For example, this may include where you are planning to demolish or refurbish the property, and the lease includes a relevant clause that allows this.

What Are Your Obligations Prior to Eviction?

Once you have established a breach by the tenant, you should provide formal written notice and give the tenant an opportunity to rectify the breach. This process begins with issuing the tenant a notice to remedy a breach, which should set out:

  • the facts of the breach;
  • how the tenant can remedy the breach;
  • how long the tenant has to remedy the breach; and
  • the consequences of failing to remedy the breach.

Your lease agreement may set out the terms of a notice to remedy a breach, such as the standard period of time a tenant has to remedy a breach before you may evict them. 

Note: You may be able to terminate the lease without giving notice if the tenant commits a serious breach of the agreement, such as causing significant damage to the parties or committing an illegal or dangerous act.

If the period in which a tenant has to remedy the breach has expired, you may now have grounds to evict the tenant. Check your lease agreement to make sure you are following the process, and you are undertaking the appropriate response to the breach.

Key Takeaways

You need to be certain that your tenant’s conduct has given rise to a termination of the lease agreement. If you do not follow the process correctly, you may be liable for action by the tenant for non-compliance with the lease agreement and potential damage to the tenant’s business. If you require assistance knowing if you have grounds to evict a tenant who has breached your agreement or have any questions about your commercial lease, contact LegalVision’s leasing lawyers on 1300 544 755 or fill out the form on this page. 

Frequently Asked Questions

How do I know if a tenant has breached the lease agreement?

Check the terms of the lease to see whether it contains a ‘breach’, ‘default’, or termination clause. If the lease does not contain those clauses, a breach may still occur if a tenant fails to meet their obligations under the lease.

What should a notice to remedy a breach contain? 

It should cover the facts of the breach, how the tenant can remedy the breach, how long the tenant has to remedy the breach and the consequences of failing to remedy the breach.

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