Regaining possession of a commercial/retail premises

Discussion in 'Commercial Property' started by callander, 6th Feb, 2009.

  1. callander

    callander Callander

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    have a friend who has a shop rented out and he looks after himself. the current tenant is months behind in the rent & outgoings. He has served notice to the tenant giving 14 days to rectify the rent or will be changing locks on the property. this all looks to be in accordance to the lease?

    Now the tenants solicitor has called him and advised that if the owner changes locks on the premises he can be sued for unlawful entry by the tenant. if this is the case then what is an owner supposed to do just sit back and let the tenant stay and not pay any rent and just wait until the tenant wants to vacate the property?:eek:
     
  2. jaycee

    jaycee Member

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    I would thin that the owner might be best to try & find out what the law is and / or what his contract allows ?

    I would think by finding that out, he would know whether the tenat's solicitor is correct or "bluffing" & then the next course of action might be more self evident.

    I guess one would start be reviewing their lease documentation ane dif not clear, run it by someone with the right qualitifaitons - I don't know who tht woud be exactly, I have no comm property.. if it was resi, I would be checking with DOCEP ior even REIWA aas a starting point.....
     
  3. sash

    sash Member

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    It depends what is in the contract. But on initial thoughts the tenant is behind and is trying to scare your friend into going away.

    But if they are behind in rent...he needs to go through the process. The first step has been accomplished. The next step is give another reminder as a final notice and as a final step they they will need to take steps to put them into voluntary administration for unpaid debts. They should take notice when last one of this arrives!

    My advice is ensure that a competent commerical solicitor is working on this. Do not approach or harrass the tenant as this could backfire and could have criminal consequences. Post everything via registered post and ensure that you keep copies and the registered post stubs.

    If it does end up in court....you can claim the court costs of defending your case. I doubt it will get there!

    Unfortunately, we are going to see more of these...as the economy detoriates further!



     
  4. Raddles

    Raddles Member

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    Hi there
    removing a commercial tenant who is behind in his rent - has to be followed strictly in accordance with the terms of the lease - or it is the landlord who will be penalised.

    I have only once had to go down all the process of starting a Supreme Court action for possession of the property in the circumstances - most tenants when they have received the lawful notices will hand back the premises - it is definately not in his interests to change locks.

    Another client did that on a residential tenancy, and ended up being prosecuted by the Residential Tenancies Authority.

    I know it is a pain - but there is process to go through - if he needs a referral to an appropriate solicitor he should talk with the Law Institute in Victoria.
    thanks
     
  5. nonrecourse

    nonrecourse Banned

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    We just went through this scenario here in Victoria. My advice is first look at the terms of the lease. If you are having difficulty understanding the jargan then make an appointment with your solicitor who hopefully drew up the lease for you and get him/her to explain your options.

    My take is if they are not prepared to pay what is owned and pay on time get rid of them immediately, don't procrastinate.

    If and when you kick them out they will not be liable for any further rent. You then can demand that they restore the building to its original state prior to their occupancy. It does get messy if they purchased a going concern and took over the lease. Especially if it is an old building. P.M me if you like and we can chat.

    Regards NR
     
    Last edited: 8th Feb, 2009
  6. callander

    callander Callander

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    Have tried to get the owner to go to a new solicitor, his current is even less familiar with commercial/retail tenancy than me and has been of no help at all.

    View attachment somersoft.pdf

    have attached section in lease regarding non payment ect. If the owner has given the required notice in accordance with the lease then how can he be sued for illigal entry?
     
  7. boomtown

    boomtown Member

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    It sounds like the other solicitor is bluffing but you need to run it past an experienced commercial property solicitor in Victoria to make sure that you are doing the right thing.
     
  8. Raddles

    Raddles Member

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    HI there
    it is not as simple as just referring to one section of the lease - there are other provisions to review - the notice sections (and whether there has been sufficient compliance) - the make good provisions of the lease and the consequences of a re-entry.

    It is really a bad idea to try and get advice on a public forum - he needs to see a solicitor - we cannot be sure there has been sufficient compliance with the terms of the lease to be satisfied he won't be sued for illegal entry.
    thanks
     
  9. nonrecourse

    nonrecourse Banned

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    Looks like part of a standard REIV lease but the comments about getting expert advice is pertinent. Your friend needs to ring the Law Institute and get a recommendation. As fotr the other guys Lawyer it usually a case of verbal flatulence to try and bluff the poor landlord.

    Get advice and serve the tenant with the correct documents.
     
  10. kum yin lau

    kum yin lau Member

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    Hi, my experience is this. The previous 'manager' didn't know or care what to do and the tenant just paid $500 every time I turned ugly.

    I sacked him & told the new manager to proceed with eviction.

    The 14 day notice was sent via registered mail. Courier is also possible.

    After 14 days, we [a lawyer was engaged] got the bailiff and proceeded to the next step.

    THE TENANT DID NOT KNOW THAT HE WOULD BE LOCKED OUT.

    The tenant knew every trick in the book and trotted out his lawyer's name whenever he saw me.

    On the appointed day, my manager was there with the bailiff and the tenant got the shock of his life. He was a printer and his computers would be worth far more than what he owed me.

    He offered $3000 and the lawyer advised take it. I refused because it'd have given me extreme pleasure to lock him out.

    He went to the bank and at 3 p.m., the total amount owing was transferred to my account

    We eventually got rid of him by putting the rent up but he still owed 2 months rent. I let it go because it would cost me more in legal fees to get it back.

    There's no point in fighting with losers because they can hurt you by trashing your property. Your friend should go according to the law but be prepared to absorb the costs.

    As a footnote, my shops are now renting at nearer to market rate which is 25% more than before the bad tenant left.

    Hope this helps your friend,
    KY
     
  11. Dazz

    Dazz Banned

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    By deliberate choice, we don't own any retail property, but by the sound of it, it appears to be only one step removed from residential. Tenants look like they have way too many rights.

    Special laws enacted for retail tenancies that ban certain clauses in normal commercial contracts - that's a red light right there to steer well clear.
     
  12. kum yin lau

    kum yin lau Member

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    Hi TP yes and no. They're commercial leases and the conditions depend obviously on how prized they're as business locations. Small shops have very low entry prices. I bought mine because they were cheaper than residential units. Even now, were I to sell, anyone who buys them would be buying very stable retirement type investment vehicles. Eg $160000 per shop with tenants paying $12000 p.a. and all outgoings. Very rare defaults. Where else is pizza man or hairdresser going to conduct their business?

    And when economic conditions allow, we apply the screws a bit more. All my tenants were made to pay bonds and one slow paying tenant was put on a 12 month tenancy subject to us being satisfied, now we have reinstated him to 2 years because he paid regularly.

    Of course, if business conditions deteriorate, then I might find myself at the other end of the cane.

    I much prefer commercial tenants, I don't have to look at small children and feel guilty about evictions. I know you're thinking other types of commercial. After I bought the small shops, my manager was trying to convince me to go into industrial. To my everlasting regret, I didn't.

    And in case anyone thinks it's easier, it's not. I just today went to court where the tenant didn't up but I wasn't informed and the hearing is postponed to next month.

    KY