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Tenant in Commercial Lease Not Paying Rent - What to Do?

Discussion in 'Property Law Forum' started by Bob, 9 May 2014.

  1. Bob

    Bob Well-Known Member

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    I have a building occupied by several tenants each with a commercial lease. One of them hasn't paid his rent for 4 months, and while I have tried to be patient with him I am now ready to get rid of him. The other complicating factor is that his lease isn't signed so I don't know whether the terms of the lease apply or whether he has some other rights at law. I know that tenants generally have more rights than landlords under the law.

    What steps do I need to take to evict my tenant that's not paying rent and get the money he owes me?
     
  2. Sophea

    Sophea Well-Known Member

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    Firstly the fact that your lease isn't signed may not be fatal. The lease may still be considered to provide the terms of your relationship with your tenant if both parties contemplated that the lease should proceed according to the terms of the lease, at the time the tenant moved in. By moving in, your tenant may have impliedly accepted your offer of tenancy which was under the terms set out in the written lease.

    Secondly, depending on the terms of your lease, not paying rent for four months will usually constitute grounds to terminate the lease.
    A commercial lease may be terminated by:
    1. acceptance of a repudiation on the part of the tenant (i.e. the tenant indicating they are no longer bound by the lease)
    2. breach of an essential term of the lease.
    3. pursuant to some other right as stated in the lease.

    Section 107 of the Property Law Act also states that, it is an implied term of commercial leases that if rent is over due for more than 1 month then it gives the landlord the right to terminate the lease.

    However, before you terminate and re-enter the property, you will need to comply with s124 of the Property Law Act which requires that you give the tenant a Notice to Remedy Breach of Covenant and provide reasonable notice for them to pay all the outstanding rent and get back on track with their payments. If they cannot pay up within the reasonable time you state in the notice you can re-enter the property. Be aware though, this is a specific form - Property Law Act Form 7 and must be filled out accurately otherwise it may be deemed ineffective.
     

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