Not paying the rent?

Published by Jared Cains on February 28, 2012

In these tough economic times it is worthwhile knowing where you stand with your lease if you are a tenant who has not been keeping up with rent 

In these tough economic times it is worthwhile knowing where you stand with your lease if you are a tenant who has not been keeping up with rent payments or if you are a landlord and your tenant has not been paying the rent. 

In addition to any rights that the landlord will have to sue a tenant for unpaid rent arrears a landlord may look to cancel the lease where the rent has not been paid. If a landlord does look to exercise this option then there are some fundamental requirements that they need to comply with under the Property Law Act 2007 before they can commence any action to cancel the lease. Those are: 

  • The rent (or any part of it) must be overdue by at least 10 working days from the rent payment date; and
  • Notice of intention to cancel the lease must be served on the tenant giving them 10 working days from the date of serving the notice to pay the outstanding arrears; and
  • At the expiry of the 10 working day period the rent or any part of it is still unpaid

It is important to note that the rent does not have to be overdue for 10 working days before the notice can be served - a landlord can serve a notice as soon as a rent payment is missed and the 10 working day period starts running from the date the notice is served. 

The notice served on the tenant needs to strictly comply with a number requirements in the Property Law Act and it is only after the notice period has expired that a landlord can then exercise their right to cancel the lease (provided that the tenant has not paid all outstanding arrears). The expiry of the notice period does not mean that the lease is automatically cancelled on expiry of the 10 day period and further notice to the tenant that the lease has actually been cancelled will need to be served. 

The issues surrounding the cancellation of a lease are varied and complex and you should consult with your lawyer before taking any steps to cancel a lease for non payment of rent (or any other breach of the lease). If the correct procedure is not followed or if you attempt to cancel a lease where you do not have the legal right to do so could mean that you are potentially liable to tenant for damages so it is absolutely essential that proper advice is obtained.



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