Leasing update – Tenant defaults – Landlords don’t get it wrong.

When a tenant defaults, a formal notice of default can be served on the tenant. What to be careful of:

• Make sure the tenant has previously been invoiced the amount alleged to be overdue;
• Make sure the lease terms allow a default notice to be served in respect of the relevant amount. For example, the Law Institute of Victoria lease provides that the tenant has 7 days to pay outgoings, so a notice could only be served after day 8;
• Make sure all current defaults by the tenant are listed;
• Make sure the notice accurately calculates the default interest at the current rate allowed under the lease (if interest is being sought);
• Make sure the notice is dated and signed;
• Make sure the notice is served in accordance with the terms of the lease (i.e. to the correct address for the tenant);
• Keep records of how and when the notice is served;
• Count the number of days the notice must be complied with (usually 14 days) from the service date (usually 2-3 days after posting depending on the terms of the lease and how the notice was served). We recommend you count the days conservatively.

If proceeding with a lock out, get legal advice prior to doing so, as a failure to strictly comply with the procedure required by the lease will result in an unlawful lockout and the tenant could sue the landlord for damages sustained.

For more information please contact Phillip Leaman of a member of our Leasing Disputes Team.