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QLD Commercial Lease Queensland - Delays and Owner Lock Out

Discussion in 'Property Law Forum' started by grant, 28 April 2014.

  1. grant

    grant Member

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    I started a commercial lease in November last year for 2 years. Due to some hold ups with the new building titles coming through, we didn't take full possession until 2 months later, when we then had to start payments. If I had known there would be a wait, I would have waited until February or March to sign the lease as January is dead and we had no capital going in. Anyway, we have gotten behind on payments and are struggling. The owner is now looking at locking us out. Does this terminate the lease at that point, or are we liable for lease until someone else is found?

    If we are locked out, it will stop us from being able to earn a living and therefore catching up on rent. We also haven't paid any bond per our agreement with the owner. We were always straight up that this was a trial for our business. We don't want to let the owner down, but also need to know our tenants rights. We have been paying some rent each month, just not enough to cover the full amount.
     
  2. Amanda E

    Amanda E Well-Known Member

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    Hi Grant

    Is it a retail shop lease, or a regular commercial lease? What kind of business are you operating?

    Have you given up on your business, or is it likely that the business will make profit if you keep operating (based on your research and indications from the market)?

    Check your lease agreement. Your lease should set out the terms for termination of the lease and taking possession. Usually there are terms that allow the lessor to take possession and lock out the lessee if the lessee is late with or does not pay their rent. That action by the lessor may be deemed to terminate the lease, or there may also be a term that you’re on the hook for payments until they find a new lessee. Its all depends on what you agreed to in your lease.

    Depending on what they owner is like, you could try to negotiate to come to an arrangement about whether you could stay on operating to make a profit or call it quits and cut your losses without being on the hook until they find another lessee.

    Has the owner already served you with a Notice to Remedy which specifies a reasonable time in which time pay your arrears?
     
  3. grant

    grant Member

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    It is a Reiq std lease at the time saved on lawyers costs at the advice of the real estate agent , we are starting to make money it has just been slower than expected but without the shop we would be affected more , havnt been served with a notice but we were always dealing with the owner till recently he handed it over to the real estate company we leased it off so it's made it harder to negotiate , so I feel a solicitor letter will arrive soon , we are still not quite making the full rent but getting closer any ideas on how to proceed , if a letter to remedy only gives 7 days we have no chance it will take a few months to catch while keeping rent currant
     
  4. Amanda E

    Amanda E Well-Known Member

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    From what I've seen of the REIQ basic type contracts, they usually have a clause that a tenant is in default if the rent is unpaid for, say, 14 days. If you have a standard clause along the lines of:
    If the Tenant defaults and does not remedy the default when the Landlord requires it to do so, the Landlord may do any one or more of the following:
    (1) re-enter and take possession of the Premises; (2) by notice to the Tenant, terminate this Tenancy; (3) by notice to the Tenant, convert the unexpired portion of the Term into a tenancy from month to month; (4) exercise any of its other legal rights;
    (5) recover from the Tenant any loss suffered by the Landlord due to the Tenant’s default.

    then you can see the rights of the landlord, which makes sense - if tenants don't pay, they can take possession, etc.

    You'll have to look at your lease terms, but if you're in breach and don't rectify it, then the landlord can exercise their rights under the lease.

    Perhaps try to come to an agreement with the real estate agent setting out how you intend to make up the rent in the future as your business grows.
    Good luck!
     
  5. grant

    grant Member

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    Thanks for the advice I have tried that but really just wanted to know in worst case if he locks us out if we would be liable for the rest of the term of the lease any thoughts on that
     

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