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Commercial tenant with expired lease?

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  • Commercial tenant with expired lease?

    Hi all,

    if anyone has knowledge on the following it would be greatly appreciated. Looking at a property and have been told there is a commercial tenant, but there lease has expired and not been renewed. Apparently the tenant is still there but now not paying rent. It is a mortgagee sale so wondering what the position would be for a new owner.

    any thoughts appreciated.

    thanks

    phillip

  • #2
    I have never heard of this. Posting to get notifications of other responses.

    But, the good thing about commercial tenancies is they are no where near as regulated. My understanding is you can lock the doors with barely any notice once they're in breach of the lease - which, by not having one, presumably they are. Plus, you can put pretty much whatever you like in the new lease, including payment for back rent if you can manage to negotiate this.

    My first step would be talking to the tenant, finding out their intentions, and seeing how hard it'll be to get a new lease signed on terms acceptable to you.
    AAT Accounting Services - Property Specialist - [email protected]
    Fixed price fees and quick knowledgeable service for property investors & traders!

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    • #3
      Originally posted by phillip30 View Post
      Hi all,

      if anyone has knowledge on the following it would be greatly appreciated. Looking at a property and have been told there is a commercial tenant, but there lease has expired and not been renewed. Apparently the tenant is still there but now not paying rent. It is a mortgagee sale so wondering what the position would be for a new owner.

      any thoughts appreciated.

      thanks

      phillip
      Hi Phillip, well basically with any tenant who's lease has expired, they go on to a monthly tenancy.

      You can issue them one month's notice.

      But if they haven't been paying the rent, then they are in breach of the lease, and so you can just change the locks.

      HOWEVER, nothing is as simple as it seems, things you may want to be careful about:

      1) What sort of business is it? Do they have a lot of crap they're going to leave behind? This can cost quite a lot to clean up.

      2) Be careful that they can't sue you for something like "Businness Interuption" which is where you kick them out and they claim they have lost money due to their business being closed.

      3) You should do this in conjunction with a lawyer of course.
      Squadly dinky do!

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      • #4
        Thanks Anthony and Davo, I will follow these ideas up. Doesn't sound as bad as I thought it might.

        apologies for the delayed reply, just seen these replies now

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        • #5
          Nearly all commercial leases, certainly those using the common ADLS Deed of Lease, go on to a monthly tenancy once the term of the lease finishes. With some caveats, you can then give a month's notice that the lease comes to an end on expiry of the next monthly period (not a months notice...it will be anything from 1 month to 2).

          You can't just change the locks without serving, and having first expire, a Property Law Act Notice, and you will need some legal help with that, particularly on how you serve the notice and how you get re-possession of the premises, especially if the tenant is obstructive and/or violent.

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          • #6
            Thanks Ivan, some good advice that I will look into.

            sorry for my delayed reply for some reason I didn't see a notification

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            • #7
              I should clarify that when your building is leased on a monthly tenancy there is no point using the Property law Act notice procedure; it will be quicker just to give notice bringing the monthly tenancy to an end. Only situation where you might try to go in earlier is where they're doing damage or have vacated and squatters are trashing the place etc

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              • #8
                thanks for the clairification Ivan

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