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
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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