leasing commercial real estate Tag

There are lots of opportunities for things to go wrong when drafting a lease but, in these three situations the consequences are particularly unpleasant.1. Failure to obtain a personal guarantee. Most leases are signed in the name of a company. If a tenant manages to get a lease in the name of a two dollar company and the requirement for a personal guarantee is forgotten then

Almost every commercial lease will provide that before a lease can be assigned, the consent of the landlord must be obtained.   If  you have commercial premises associated with your business there are some very good reasons to make sure that the assignment of the lease is properly handled. We recently acted for a commercial tenant.  This client came to us with a big problem, which had only become obvious to them a year after the date of the sale of their business. The commercial tenant had sold their business a year earlier and had assigned the lease of the business premises to the buyer.  Things did not go smoothly. The landlord set out the conditions upon which consent would be given.

In our last article we described how it is necessary for a Queensland landlord to issue a form 124 notice before taking any steps to retake possession of premises from a tenant who holds those premises under a Queensland Commercial Lease. A commercial tenant will always have the right to apply to the courts for something called "relief against forfeiture".   The relief may be given even if the tenant is in default of the lease and even though the lease specifically provides that the landlord has the right to terminate. Courts have a wide and unfettered discretionary power to take into account all of the circumstances before deciding if the Court will allow a landlord to retake possession from a tenant.  Therefore a landlord may not have the ability to terminate a lease even if the tenant is in default. A tenant cannot claim relief against forfeiture before the landlord has commenced proceedings for possession or has taken possession. If the tenant anticipates that the landlord is making preparation to take possession then the tenant may apply for an injunction.  The tenant may do this once the section 124 notice is served. So how does the court decide if it will grant this "relief against forfeiture"?

If your Tenant has failed to pay rent or is in breach of some other essential term of the Lease, you may decide that terminating the Lease and searching for a new Tenant is the best way for you to limit your losses.   It may be, for instance, that the tenant is impecunious.

Before you will be able to “change the locks” and re-enter your property, Section 124(1) of the Property Law Act provides that you must first serve on your Tenant a notice which states the breach complained of and what the Tenant has to do to remedy the breach.

It is in your best interests that any breach notice is issued correctly the first time.  You must ensure that the breach notice is factually accurate and complies with the technical requirements imposed by law.

Providing a defective notice can be costly.

Firstly, a defective notice may give the Tenant the ability to have the notice set aside. This would force you to re-issue the notice thus delaying your efforts to terminate the Lease. This may allow the Tenant to continue to occupy the Premises while in breach until such time as the notice is re-issued correctly.

Do you lease premises for your business? Many business owners do not realize that when they sell their business and assign their lease, they may remain liable to the landlord for many years after the assignment.  If the buyer (the new business owner) can't pay the rent then the landlord may come looking for the previous tenant to cover the loss.  Is that you?

Many leases actually provide that an assignment of the lease does not release the previous tenant from liability to the landlord. Don't despair!  Read to the end of this article where we make reference to some legislation that may assist if you are a retail shop tenant.

Many people wrongly believe that if an agreement is not put in writing they are not required to honour the agreement. This is incorrect (except for some exceptions, one of which is noted below).  A verbal agreement may be enforced by either party to the agreement regardless of whether that agreement is in writing.  So be careful what you agree!

The difficulty you may have guessed is, proving what was agreed.  Indeed we see many agreements, even written agreements that are very unclear. There is sometimes so little detail or, so little care taken, that it is difficult to know what the parties are intending.

Most transactions whether for the sale of property or a business include at least two or three important dates. These dates are:

1. The date that the contract is signed by the parties to that contract

2. The date that special conditions are satisfied

3. The date that the contract reaches settlement or completion. The completion date and the settlement date are different words, used to describe the same thing.

Which of these dates do authorities rely upon when determining the date of the sale?

If you are a business that rents premises then you should urgently have a lawyer check to see if your lease is secure.

In some areas of Queensland small commercial landlords might be under strain and business owners may as a result lose their business.  Below we have set out the steps that you can take to make sure that your business is not affected. Unfortunately  many leases in Queensland are not protected as Section 66 of the Land Title Act has been ignored or forgotten.   If the landlord is put into insolvency or bankruptcy then the commercial tenants may be in serious trouble.

A bank wanting to sell business premises does not necessarily want to keep the business in place, particularly if they believe that they can get a better deal with the tenant gone. This may be so if a buyer wants to redevelop or renovate or the buyer wants to occupy the property themselves.  

A tenant may have  no legal right to complain, if a landlord is charging "unfair" rent which is well above the amount that a valuer might say is market rent.  The lease determines the rent that is charged.  In better times a deal may be struck between the landlord and the tenant.  Over time circumstances and the economy may change.  Rent is not however determined by the rental market at any particular time.  Rental is determined only by the lease. But there may be other things which a tenant can do.

You may have heard the saying. "A row is never about, what a row is about".  In other words when people argue with each other, they often argue about the things which did not cause their initial dissatisfaction.  Watch yourself in your next argument with your partner.  Does the focus of that argument keep changing?  It is the same in law.

A dilemma which often faces commercial and retail shop tenants in Queensland is whether or not they should register their Lease with the titles office.

It is common in practice for the Tenant to bear the costs of and incidental to the registration of the Lease. This can include the costs of having a Premises surveyed and plans prepared, lodgement fees and requisitions. This can all be a very costly process.

The question that often confronts a Tenant is: do the risks associated with not registering the Lease justify the initial costs of registration?

So what are the risks?