Please be aware as a landlord of retail premises that notwithstanding that the lease documentation may require the tenant to exercise its option for renewal of a retail lease in writing by a certain date, the Retail Leases Act reverses the onus with respect to who is to provide notice for renewals, and imposes on a retail landlord an obligation to serve on the tenant a notice effectively reminding the tenant of the date by which he must exercise his option for renewal.
That notice from the landlord must be given to the tenant not more than nine (9) months and no less than six (6) months prior to the date by which the tenant is to exercise his option which is generally three (3) to six (6) months before the expiration of the term of the lease.
It is therefore essential that some twelve (12) months before the expiry of any retail lease you review your lease documentation and if necessary arrange for the relevant notice to be given by or on your behalf to the tenant citing the last date by which the tenant must give notice of the exercise of its option to renew the lease so as to avoid any extension of the time within which the option is to be exercised and the resultant extension (in effect) to the term of the lease.
If you fail to give the notice required by law, the tenant’s right to renew the lease will continue until the terms of the legal requirement have been complied with by you. The tenant’s rights will expire six (6) months after the date on which you do serve the notice, during which time the tenant is entitled to remain in occupation of the premises at the same rental as at the end of the lease and you, of course, will remain uncertain as to whether or not the tenant intends to exercise the option.
We are also obliged to advise you that if there is no option for renewal contained in a lease, you are nevertheless obliged to notify the tenant at least six (6) months but no more than twelve (12) months before the lease term ends either:
- in offering the tenant a renewal of the lease on terms specified in the notice; or
- informing the tenant you do not propose to offer the tenant a renewal of the lease.
If you fail to comply with that notice, you must give that notice and the lease continues until at least six (6) months after the date of the notice has expired.
You will note that there are significant impositions on retail landlords which are not always understood, and we recommend that you diarise the date of expiry of each lease in which you are a landlord and also the requirement to give the appropriate notice twelve (12) months prior to that expiry date, and that reminder should ensure that your position is not prejudiced by your failure to comply with the Retail Leases Act.
We remain available to assist you as and when the occasion arises, however we are not in a position to remind all of our clients of all relevant significant dates and process which should be observed and hence our advice that you diarise appropriately.
If you require any further clarification or information, please do not hesitate to contact us.