Landlords of commercial properties most often require that the property being leased be used for a specific purpose. This is particularly important to preserve the nature of the premises in its most original and useful condition. For example, if a commercial landlord has a space that is perfect for a beauty salon, they might not take kindly to a renter agreeing to use it as a salon, but then deciding to turn it into a mini-mart.
But what can a landlord do if a commercial tenant is abiding by all of the terms of the lease except they have altered the property and are using it outside of the purpose agreed upon?
Initially, every landlord must remember that the tenant does have the right to “quiet enjoyment” of the property. This means that the landlord cannot insist upon being allowed to enter the premises and cause issues with the manner in which the property is being used without giving prior notice to the tenant.
Therefore, it is highly recommended that a landlord who is concerned about the way in which the space is being used start with the following;
- Contact the tenant, via writing, and list the concerns that are associated with the manner in which the property is being used
- Request an opportunity to view the property for a “terms of use” inspection
- If you do not hear from the tenant within five (5) business days, follow up with the tenant via telephone and attempt to schedule an appointment to view the property
- Follow up the telephone call with writing that states the date and time of the call and the contents of the conversation and, if you have made an appointment to visit the premises, confirm that you will be visiting at the agreed-upon date and time.
Once you have scheduled a time to visit the premises, be sure to take pictures of any of the changes that have been made that are not in conformity with the agreed purpose that the property was leased for. You can then proceed with a combination of the following;
- Come to an agreement that the use can continue and amend your lease to include the new purpose
- Include a “make good” clause in the amended agreement which states that the tenant will return the property to its original condition upon vacating the lease at their own cost
- If your lease already has a “make good” clause within it, remind the tenant of the same and if you are in agreement that the tenant can continue to operate outside of the purpose of the lease, reiterate that the property must be returned to its original condition upon vacating the premises and that the cost of such reversions will remain with the tenant.
- Follow up your visit with a written statement of what you agreed to and be sure to amend the lease to include a “make good” clause, if one does not already exist.
If you are not successful in working the issue out directly with the tenant, then you must take further action. You should then contact the New South Wales Business Commissioner. Once you approach the NSW Business Commissioner a mediation will be scheduled for you and the tenant to attend. In mediation, you may be able to work out your differences and move forward with a new arrangement. If you are not successful at mediation you will then be allowed to request a hearing with the NSW Civil and Administrative Tribunal (NCAT). You can then present your case to the tribunal at a hearing and a decision will be issued.
Also, if you are so inclined, you can attempt to terminate the lease. However, terminating a lease can be a difficult undertaking. While you might believe that you have a strong case for breach of the commercial lease contract, you cannot be sure until you have had the lease and the circumstances reviewed by a solicitor who specializes in commercial property leases. If you want to undertake this route, we strongly recommend that you reach out to a commercial property attorney as soon as practicable.
If you find yourself in need of assistance with this or any other legal issue, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.