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What are Commercial Lease Notices?
Sometimes, landlords and property managers of commercial spaces need to give their tenants notice regarding issues, such as breached lease terms, eviction, or the upcoming end of a lease. Commercial Lease Notices are the documents that landlords and property managers use to inform or warn their commercial tenants of these various issues.
To use these notices, you and your tenant must have signed a Business Lease and the rental property must be commercially zoned. Commercial properties include:
- Offices
- Retail stores
- Restaurants
- Warehouses
- Industrial spaces
If you manage residential tenancies, use Residential Lease Notices instead.
Why is it important to use Commercial Lease Notices?
As a landlord, you must give your tenants notice in written form. Calling your tenant or paying them a visit to inform them of something important, such as eviction, is not enough.
Landlords can benefit from using written Commercial Lease Notices. If you ever find yourself in a legal dispute with a tenant, having evidence of the days on which you provided notice can help you in court. Written notices create a record of the date on which you provided notice and prove that you gave the tenant adequate time.
Types of Commercial Lease Notices
Not all Commercial Lease Notices are the same. The various types can help you communicate different things to tenants. There are three types:
- Notice to Remedy
- Notice to Quit
- Notice of Termination
Notice to Remedy
A Notice to Remedy, also known as a warning notice, is used when a tenant breaches a lease term. The notice informs the tenant that their landlord is giving them a period of time to remedy the breach before pursuing eviction.
In a lease, a breach can either be a breach of a covenant or condition.
- A condition is a contingency that must be met. For example, a lease may contain the condition that the lease will be forfeited if the tenant ever declares bankruptcy.
- A covenant is an agreement from the tenant to do (or not to do) a specified act, such as paying rent on the first day of every month.
Unsurprisingly, the most common breach of a covenant is not paying rent. However, a tenant can violate their lease in other ways. For example, if a Business Lease states that the tenant needs to maintain common areas and the tenant fails to do so, the landlord may choose to send a warning notice. The notice gives the tenant a chance to fix the situation so they are no longer in violation of their lease.
If a tenant does not remedy the breach of covenant or condition by the end of the notice period, the landlord must serve a Notice to Quit to the tenant before pursuing eviction.
Notice to Quit (eviction)
Suppose a landlord has informed their tenant of a lease violation and provided the required notice, but the tenant has still not remedied the breach. In that case, the only solution may be to end the lease early, also known as eviction.
In New Zealand, sections 245 and 246 of the Property Law Act (PLA) 2007 require landlords to give tenants notice before they terminate a lease due to a breach. Generally, landlords must give 10 days' notice before evicting a commercial lease tenant due to the non-payment of rent.
For any other type of breach, a landlord is required to give a reasonable amount of notice to the tenant to remedy the breach, after which the landlord can cancel the lease. “Reasonable amounts of notice” can vary depending on circumstances.
If the tenant refuses to leave after the expiry of the notice period, a landlord may immediately reenter the rental property and change the locks, if such an act can be done "peaceably". If it cannot be done peaceably, or if the landlord otherwise feels uncomfortable entering the property and changing the locks, the landlord may ask for a court order, declaring that the tenant must leave the property. If the tenant still fails to leave, law enforcement can become involved to help evict them.
A Notice to Quit usually includes:
- The date the Business Lease started
- The breaches of certain conditions or covenants
- The actions required to remedy the breach
- The amount of time the tenant has to remedy the breach
Notice of Termination
Sometimes, landlords have to end a tenancy for reasons other than for lease violations. A Commercial Notice of Termination is for cases in which a landlord simply wants to bring an end to a fixed-term or periodic tenancy.
A fixed-term tenancy is a tenancy for a fixed number of weeks, months, or years that has a start date and a specific end date. Sometimes, leases may start out with a fixed term and then roll over into periodic. Once a fixed-term tenancy ends, the tenant has the option to renew it automatically, but on updated terms agreed to between the tenant and the landlord.
A periodic tenancy is a weekly, monthly, or yearly tenancy that automatically renews and will continue so long as neither party wishes to terminate the tenancy. To end a periodic tenancy, a landlord is required to provide a tenant with a minimum of 20 working days' written notice in advance of the termination.
How do I deliver Commercial Lease Notices to tenants?
There are specific legal requirements for proper written notice. Usually, proper written notice must be delivered in person, by registered post, or affixed to the door of the rental property. Consult your local laws before providing written notice to ensure you meet all requirements.
