NSW Real Estate Agents Delaying Commercial Lease Agreement

[HB478]

Hi,

We are a small business based in New South Wales. We had a commercial lease agreement which terminated at the end of November 2014. We have repetitively contacted the real estate agents to have a new lease agreement drawn up and signed, however, they kept delaying citing that the owner has not agreed on the rent amount and lease terms.

We have been making monthly payments of the same amount as the last lease agreement every since the lease had terminated.

The real estate agents increased the rent, in Feb 15 and then again, in Oct 15, during this whole time, we have been paying the same monthly rent amount as the last lease agreement. They sent us a letter in September that they were going increase the rent (in relation to the Oct increase) but still did not produce a lease agreement for us to sign.

They said that they will give us a new lease agreement to sign once we pay the amount which we 'owe' them since the price increases in Feb and subsequently Oct 15. However, they were not specific on what the amount or terms will be on the new lease (we had verbally agreed to a figure, in March 15 when we visited their offices, they said they will send it over once we paid the arrears but we said we would not pay until we sign).

We have said we will not pay the arrears until we actually sign the new agreement.

My questions is:

1. Can they increase the rent for us like that without us signing a lease agreement?

2. Do we have to pay the arrears amount? (assuming we stay)

3. Do we have to pay the arrears amount if we move?

4. Do we have the right to say we will not pay the arrears amount until the new lease agreement is signed?

5. What rights do we have as the lessee since the commercial agreement had been finished almost a year ago?

It has been a very stressful year and feeling like we have been led on.

Any insight would be most welcome.

 

[James D. Ford - Solicitor]

Hi,

Can you please advise whether your previous Lease contained any Options to Renew?

If not, without further written agreement... your lease continues on a month to month arrangement on the same terms, and the same rent as the Lease that has expired.

So unless the previous Lease makes some provision for what they have attempted to do by trying to increase the rent.. (which I highly doubt) ... there is most likely no legal basis for them doing so... therefore, if you decide to leave, there is no obligation to pay these rent increases.

However, there is equally, no legal obligation on them to prepare and sign a new Lease Agreement.

So if you decide to stay... you are both free to negotiate the terms of the new Lease Agreement, from scratch.

Until the previous Lease is terminated, (or replaced with a new Lease) it continues on a month to month arrangement... and you are only liable to pay the rent specified by the previous Lease agreement.

Kind regards

 

[HB478]

Hi James,

Thank you for your response, it gives us some relief.

To confirm, we do NOT have the Option to Renew in the Lease agreement.
There is no provision to increase rent only mention of an annual review to increase by CPI. Thus we are still governed by the old lease agreement on a month by month basis.

A follow up question, if we are unable to agree new lease terms and we do not pay the rent in arrears they want, they have the right to terminate our lease with the same notice period as the previous lease?

We also have a bond with them, which if we decide to leave, I believe they will definitely try to claim the 'arrears' from this amount. Is there a relevant body we can raise this matter with to get our bond back?

Again, thank you so much for your responses, James. It is greatly appreciated.

Kind regards

 

[James D. Ford - Solicitor]

Hi,

My understanding is that a month to month extension of a Lease, means that it can be terminated with 1 months notice... let me know if the Lease provides otherwise.

There are no legislative requirements for a bond under a commercial lease.

The Lease itself should set out the conditions regarding use, withholding and repayment of the bond.

We can deal with the issue of the non-return of the bond, if and when the Lease is terminated, and the final position is determined.

It is likely you will have "make good" obligations pursuant to the Lease... and the cost of these may exceed the bond amount... we can discuss before any decisions are made with regard to whether your should "make good", or to obtain quotes, and tell them to do it themselves and to use the bond money to do so...

Kind regards