Breach of commercial leases

During the course of a commercial lease, disputes can arise between landlords and tenants. Usually such disputes relate to an allegation that the terms of the lease have been breached by the other party.

For commentary relating to the failure to pay rent by a tenant please see our separate page regarding commercial rent arrears. The following information relates to other leasehold breaches of covenant.

Why would someone need this service?

Common examples of a breach of lease include the failure to maintain the property in good repair, the failure to return the property to the landlord in the state it is required to be in (as set out in the lease) or where it is alleged that the notice provisions required to terminate a lease have not been followed correctly.

A tenant on the other hand may complain that the landlord’s actions during the term of the lease are interfering and amount to a breach of the tenant’s right to quiet enjoyment of the property.

How does the process work?

It is the terms of the written lease that set out the obligations which the landlord and tenant are required to adhere to. It is therefore the lease which is the single most important document which we will need to consider and discuss with you in order to assess whether a breach has been committed.

We would normally encourage the parties to begin an open dialogue to consider whether it is possible to reach agreement to resolve the dispute at an early stage. This is particularly important where the lease is still continuing to run, notwithstanding the fact that a breach has been committed.

If it is not possible to reach agreement then more formal steps can be taken. If we are acting for the landlord then the breaches should be set out within a formal notice (known as a Section 146 Notice). This Notice informs the tenant that unless the breach is rectified within a stated period of time, the landlord will be permitted to take further action which may ultimately lead to the lease being forfeited.

How long does the process take?

If the parties engage in a constructive dialogue, the dispute could potentially be resolved in a matter of weeks.

If a Section 146 Notice is issued, a landlord would be required to state within the Notice the time frame by when the breaches might be rectified. The time frame will depend on the breach.

If either party does issue court proceedings, it is normally the case that a claim will be considered at trial within a period of 12 to 18 months after issue of the proceedings. In the majority of cases, disputes are resolved prior to trial by the parties agreeing settlement terms.

Is it expensive? How much does it cost?

When we meet with you we will consider the matters that need to be attended to and provide you with a cost estimate at the outset.

What people should consider before calling?

It would be helpful if you could provide us with a copy of the lease. Furthermore, if there has been any correspondence between yourself and the opposing party regarding the breach, this would also be of assistance.