My last article in this series will focus on how the leasing
deal can come to an end, the consequences associated with ending a
lease and what you need to consider in such circumstances.
Ending a lease
A lease can come to an end in the following circumstances:
The term of the lease has expired;
The lease is terminated following a default (of usually the
The lease is terminated as a result of the landlord exercising
its rights following a redevelopment or demolition of the premises
or the building that the premises is located in;
The tenant negotiates a surrender with the landlord.
The important issues
The main issues that arise when a lease comes to an end,
regardless of the circumstances surrounding its termination,
Does the tenant owe the landlord any money under the lease, and
if so what arrangements will be made to ensure its recovery?
What is the extent of the tenant's make good obligations?
Do the premises need to be stripped to a bare shell, or does it
need to be returned to what it was like when the tenant first took
occupation – is there a condition report that can be
Who is responsible for remediating any environmental
Is there any structural damage to the premises and if so, who
caused it and who is responsible for repairing the damage?
When must the landlord return the bank guarantee or security
deposit to the tenant? Can a failure on the part of the tenant to
comply with any of its obligations referred to points 1 to 4 enable
the landlord to withhold part, or all, of that bank guarantee or
These questions can be answered by a review of the obligations
under the lease, the terms of any supporting documents (such as the
bank guarantee) and a comparison of the facts of the case against
the terms of these documents.
Is compensation payable?
When a lease is terminated following a default by the tenant, or
following any redevelopment or demolition, the parties may also
need to consider what compensation may be payable. More
If the tenant is in default, are damages calculated on the loss
of rent plus interest owing for the term of the lease whilst the
premises has not been relet? Exactly what type of default must the
tenant be guilty of before a lease can be validly terminated by a
If the landlord is refurbishing or demolishing, what must the
landlord pay to the tenant eg. depreciated value of the fit out,
shifting expenses, fit out of new premises?
If the parties have negotiated a surrender, what is the basis
for calculating the surrender fee?
These questions can be answered by a review of the terms of the
lease and the relevant legislation – such as retail
Think about these issues before you act!
Over the years I have seen clients caught up in time-wasting and
messy legal disputes simply because they have not addressed these
questions thoroughly before terminating a lease.
As the head of Coleman Greig's property team I would be
happy to walk you through the issues surrounding your particular
lease, and address the issues of termination and what your benefits
and responsibilities might be in advance. Obtaining qualified legal
advice before ending a lease could save you considerable time and
For more information contact Andrew Grima at
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.
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Many retail leases include a covenant to trade, requiring the tenant to open the premises for trade during certain hours.
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