You have rented out a commercial property to a tenant, and everything seems fine – they are paying rent on time, and there are no issues with outgoings. Then you discover that they are using the space for a purpose that is outside of the terms of the lease which could potentially damage the property. How do you enforce the terms of the lease? This article will go through your rights as a landlord in this situation and what your options are in NSW.
Inspections and Disputes
When you grant a tenancy by signing a lease, the tenant has a right to quiet enjoyment. The right to quiet enjoyment means that you cannot enter the premises or interfere with the tenant’s use of the premises. However, you can enter the property for routine inspections. To do this, you would have to organise a time with the tenant to give them notice.
If your tenant refuses to let you enter the property, then the first step to is to go to the NSW Small Business Commissioner. You can then approach the NSW Civil and Administrative Tribunal (NCAT) – the state’s specialist tribunal.
Going to the NSW Small Business Commissioner would involve undergoing mediation between yourself and the tenant. They would issue a certificate stating that you undertook mediation, and you would have to provide this to NCAT before a hearing can take place.
A dispute would then be lodged with NCAT’s Consumer and Commercial Division. NCAT will hold your hearing within 4 weeks. NCAT has the power to make a broad range of orders including:
- The payment of money;
- Orders of possession of the premises; and
- Declarations as to the rights, obligations and liabilities of the parties.
You may also be able to terminate the lease if your tenant is using the premises for something outside its terms. Typically, a commercial lease will include a clause permitting termination if the other party breaches the lease. If you want to terminate the lease, then there are procedures that you must follow. These will be outlined in your contract or under state law.
In NSW, you have to provide notice to the tenant that they have breached the lease. This notice should specify precisely what the tenant has done to violate the lease and request the tenant to rectify the infringement. As part of this notice, you can also ask for compensation. After giving this notice to the lessee, you must wait a reasonable amount of time before you can terminate the lease.
Another option to consider is to require the tenant to “make good” the premises. This means that they have to return the premises to the state that they were in before they entered the lease. Before you can require your tenant to “make good” the premises, you should check to see that this is clearly stated in your lease. If your contract contains a “make good” clause, it will allow you to recover costs of repair for non-permitted use from your tenant and they will have an obligation to return the premises to the condition it was in before they entered into the lease.
Enforcing the strict use of your premises can be a complicated process. It’s important to note that there are procedures to follow regarding entering the premises, starting a dispute claim, or terminating the lease. There are also numerous avenues to enforce your rights as a landlord.
If you have any questions or need assistance with a leasing matter, get in touch with our leasing lawyers on 1300 544 755.