Landlords should not rest on their laurels, and think that having a clause in a lease making the exercise of an option to renew a lease, conditional on performance of the Lease by the Tenant, is in itself sufficient protection should the Landlord want to challenge a Tenant taking up its option. The Landlord needs to do more, and in a very timely fashion.
In situations where the breach of the lease occurred before the Tenant gave notice the Landlord has to also give a prescribed notice to the Tenant that complies with section 133E of the Conveyancing Act 1919, and do so within 14 days of the Tenant giving notice.
The Tenant then has one month from receiving the prescribed notice from the Landlord in which to seek from the Supreme Court an order for relief against the operation of the clause in the lease that makes the effectiveness of the option conditional on performance of the Lease. Where that application is not made by the Tenant in time, or the resulting Court proceedings are ultimately lost by the Tenant, then the Tenant's option for renewal of the Lease would then be extinguished.
As the window for challenging the exercise of an option, is a fairly short period, Landlords are encouraged to contact the Commercial Property team at Coleman Greig Lawyers for assistance, as early possible within those 14 days so that we then have sufficient time to draft and serve the prescribed notice. The notice has to specify in what respect the Tenant is in breach of the Lease, and also has to state that unless the Tenant obtains a Supreme Court order under section 133F of the Conveyancing Act 1919, the Lessor intends to and is entitled to treat the specified breach of the Lease as precluding the Tenant from its entitlement to take up the option to renew its lease. Timeliness is everything.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
