CTRS protections has ended. What do you do now when a tenant defaults?
With the end of the CTRS protections on 15 March 2022, we are noticing an increasing number of tenants who are unable to pay rent or have otherwise breached their leases.
What can landlords do if a tenant breaches the lease?
If a tenant is in breach of a lease, the landlord may charge interest and/or serve on the tenant a notice of default pursuant to section 146 of the Property Law Act 1958, requiring that the tenant rectify its breaches within a stipulated time.
What constitutes a valid section 146 notice of default?
- A section 146 notice must be in writing, and must specify each breach of the tenant and how the tenant may remedy such breaches, noting that the landlord need not specify with absolute precision how each breach is to be remedied.
- The tenant must be given a minimum of 14 days to rectify or respond to the notice after service.
- Pursuant to s146 of the Property Law Act, landlords must provide no less than 14 days for tenants to rectify a breach. It is important that this 14 day period is provided, otherwise the section 146 notice will not be valid.
- It is worth noting that the stipulated 14 day period is not purely for the purposes of the tenant remedying the breach, rather the tenant is provided the 14 day period to consider its position in relation to the breaches and to provide a response (which includes remedying the default by payment of any arrears, for example).
- The section 146 notice must be served on the tenant in accordance with the lease. Each lease is different and how a notice is allowed to be served on a party under the lease will vary depending on the terms and conditions of the lease.
If no response is received from the tenant and the breaches are not remedied within the stipulated time, the landlord may terminate the lease by re-entering the premises, and changing the locks.
It is important to note that after the stipulated time expires, in order to retain their ability to rely on the notice of default, the landlord must arguably reject any rent received from the tenant after the notice expires, as this may give rise to the argument that the lease is still on-foot, and the notice procedure will need to start over again.
It is important for landlords ensure that the notice of default is accurately prepared as any mistakes or miscalculated figures may invalidate the notice.
If you require any assistance in reviewing your lease, advising you of your rights under your lease, or preparing a section 146 notice of default to rectify a tenant’s breach in a lease, please do not hesitate to contact a member of our team.
