For Commercial Landlords

There are lots of opportunities for things to go wrong when drafting a lease but, in these three situations the consequences are particularly unpleasant.1. Failure to obtain a personal guarantee. Most leases are signed in the name of a company. If a tenant manages to get a lease in the name of a two dollar company and the requirement for a personal guarantee is forgotten then

In our last article we described how it is necessary for a Queensland landlord to issue a form 124 notice before taking any steps to retake possession of premises from a tenant who holds those premises under a Queensland Commercial Lease. A commercial tenant will always have the right to apply to the courts for something called "relief against forfeiture".   The relief may be given even if the tenant is in default of the lease and even though the lease specifically provides that the landlord has the right to terminate. Courts have a wide and unfettered discretionary power to take into account all of the circumstances before deciding if the Court will allow a landlord to retake possession from a tenant.  Therefore a landlord may not have the ability to terminate a lease even if the tenant is in default. A tenant cannot claim relief against forfeiture before the landlord has commenced proceedings for possession or has taken possession. If the tenant anticipates that the landlord is making preparation to take possession then the tenant may apply for an injunction.  The tenant may do this once the section 124 notice is served. So how does the court decide if it will grant this "relief against forfeiture"?

If your Tenant has failed to pay rent or is in breach of some other essential term of the Lease, you may decide that terminating the Lease and searching for a new Tenant is the best way for you to limit your losses.   It may be, for instance, that the tenant is impecunious.

Before you will be able to “change the locks” and re-enter your property, Section 124(1) of the Property Law Act provides that you must first serve on your Tenant a notice which states the breach complained of and what the Tenant has to do to remedy the breach.

It is in your best interests that any breach notice is issued correctly the first time.  You must ensure that the breach notice is factually accurate and complies with the technical requirements imposed by law.

Providing a defective notice can be costly.

Firstly, a defective notice may give the Tenant the ability to have the notice set aside. This would force you to re-issue the notice thus delaying your efforts to terminate the Lease. This may allow the Tenant to continue to occupy the Premises while in breach until such time as the notice is re-issued correctly.

Many people wrongly believe that if an agreement is not put in writing they are not required to honour the agreement. This is incorrect (except for some exceptions, one of which is noted below).  A verbal agreement may be enforced by either party to the agreement regardless of whether that agreement is in writing.  So be careful what you agree!

The difficulty you may have guessed is, proving what was agreed.  Indeed we see many agreements, even written agreements that are very unclear. There is sometimes so little detail or, so little care taken, that it is difficult to know what the parties are intending.

Land Tax Thresholds Change regularly. You should contact Riba Business Lawyers to ensure that the rates have not changed since the  date of this Post.

For Individual who are resident in Queensland.

Taxable value Rate of tax
$0–$599,999 $0
$600,000–$999,999 $500 plus 1 cent for each $ more than $600,000
$1,000,000–$2,999,999 $4,500 plus 1.65 cents for each $ more than $1,000,000
$3,000,000–$4,999,999 $37,500 plus 1.25 cents for each $ more than $3,000,000
$5,000,000 and over $62,500 plus 1.75 cents for each $ more than $5,000,000

A dilemma which often faces commercial and retail shop tenants in Queensland is whether or not they should register their Lease with the titles office.

It is common in practice for the Tenant to bear the costs of and incidental to the registration of the Lease. This can include the costs of having a Premises surveyed and plans prepared, lodgement fees and requisitions. This can all be a very costly process.

The question that often confronts a Tenant is: do the risks associated with not registering the Lease justify the initial costs of registration?

So what are the risks?

If you are a commercial tenant you probably already know that retail shop tenants have a higher level of protection than do other commercial tenants. A retail shop landlord is restrained from doing certain things.

You may be a retail shop tenant even if you do not operate a retail shop. It is essential that you are able to determine if you are entitled to the benefits of the act. A link to the Retail Shop Leases Act is set out here.

Landlords are not permitted to pass on the cost of preparing a lease to their retail shop tenant.

There are rules about the maximum proportion of outgoings that a landlord can ask a retail shop tenant to pay.

The landlord is restricted in the way that increases in rental can be imposed.

There are other benefits also.