How you can cancel your lease with a Tenant

It can be very stressful if your tenant has breached the terms of their lease, and you need to re-take possession of your property. It is important that the proper legal process is followed, a landlord who doesn’t take the right steps could expose themselves to a range of unintended consequences. This article sets out how you can cancel your lease with the least amount of grief, and how we can assist in this process.

Step 1: Issuing a valid default notice

A landlord must comply with the provisions of the Property Law Act 2007 (Act) when cancelling their commercial lease. Firstly, a specific form of notice must be served on the tenant in a specific way. The notice must contain sufficient details of the breach, what the tenant is required to do next, and how long they have to put things right. Care must also be taken to serve the notice on all relevant parties – in some cases, this may include the tenant’s bank.

Lease cancellation notices are best prepared by an expert, as the form, content, and service requirements for a lease cancellation notice are very strict, and a mistake could render the entire notice defective or expose the landlord to a damages claim. It is common that the landlord’s legal costs will be recoverable from the defaulting party. Cavell Leitch can assist landlords in serving notices (and incidentally we can also assist tenants who have received a default notice).

Step 2: Entering into a dialogue with the tenant

Once a notice has been served, we can liaise with the tenant on the landlord’s behalf to see if a resolution can be negotiated e.g. a payment plan for the unpaid arrears.

Step 3: Peaceably re-entering the leases premises

A landlord will typically have two options if they with to retake possession of the premises. The landlord can either apply to the court for an 'order for possession of the land', or the landlord can 'peaceably' re-enter the property and change the locks.

A strict legal process needs to be followed if the premises is being re-entered, and this is not entirely without its risks. A landlord should seek legal advice as to whether the tenant has any right to apply to the courts for relief against the lease’s cancellation. The courts have a wide discretion in deciding whether or not relief is warranted, and such relief could take the form of reinstating the lease or even awarding the tenant damages.

Step 4: following up on the outstanding debt

Once the lease has been terminated successfully, a lawyer can assist in supervised access for the tenant to the premises to remove the rest of their belongings. A member of Cavell Leitch’s Dispute Resolution team can also assist in bringing debt collection proceedings against the tenant as well as any guarantors.

Conclusion

Cancelling a lease is never a pleasant task, but it was important that the process is followed properly so that a landlord can reacquire possession of their premises with a minimum of fuss and cost. This will leave the landlord with a vacant premises which could be re-leased relatively quickly, while the tenant will clearly understand what is expected of them. The lease procedure can be complicated, and the consequences of not getting it correct can be significant. We recommend that a landlord (or a tenant) in this difficult position seeks legal advice as soon as possible. Please contact a member of Cavell Leitch's leasing team today if we can be of assistance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.