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Recovering arrears for an expired lease ....HELP PLZ!

Discussion in 'Commercial Property' started by 10in10years, 7th Dec, 2015.

  1. 10in10years

    10in10years Member

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    My wife's uncle owns a shop & he hasn't put up the rent, despite a CPI rent review clause in the lease stating that he must give written notice of the new rate.

    He never did this & allowed the tenant to pay the same rent (under market) for years. The lease expired & the tenant exercised an option at (yes you guessed it) the same rent.

    His solicitor is saying that you can enforce this clause (CPI rent review) as the lease has expired.

    As the owner self managed the property & doesn't understand English very well, it could be argued that he is not a fit and proper person.

    Can anyone shed some light on this? Much much appreciated. Thanks guys:)
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Your wife's uncle should seek legal advice.
     
  3. 10in10years

    10in10years Member

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    Thanks for the reply Terry. He is actually now selling his shop & his solicitor has advised he has no case as the contract has finished. I disagree, but not sure if I have a leg to stand on (we're talking around $20k in unpaid increases).
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    the lease wording would be important here.
     
  5. thatbum

    thatbum Well-Known Member

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    If you disagree with the legal advice, then you should probably get another legal opinion.
     
  6. 10in10years

    10in10years Member

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    nothing about a time limit to enforce the increase. See below.

    - The lessee must continue to pay rent at the old rate until the new rate is known. After that, the lessee is to pay the new rent from the next rent day. By that rent day the lessee is also to pay any shortfall between the old and new rate for the period since the rent review date.
    - the lessor must calculate the new rent after each review date and give the lessee written notice of the new rent.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    was written notice given?
     
  8. 10in10years

    10in10years Member

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    no
     
  9. 10in10years

    10in10years Member

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    thanks, that's what i'm thinking. The solicitor is saying that the owner has no claim on the unpaid increases once settlement occurs as he no longer owns the property. I disagree but not 100% sure. In addition to the expired lease & risk of settlement delaying further (or worse) it feels like it's an uphill battle.
     
  10. 10in10years

    10in10years Member

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    A bit heavy for a monday night. Anyway, thanks for your comments Terry.
     
  11. Scott No Mates

    Scott No Mates Well-Known Member

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    Hey @10in10years - there are obligations placed on the Lessor in this instance ie they must give notice to the tenant of the new rent at each anniversary of the lease. If there is nothing precluding the lessor advising of the rent increase (some leases do allow a rent review to lapse or be forgone), the lessor should serve notice on the previous reviews. It may be possible to recoup the reviews from the previous lease.
    As for the new lease, the commencement rent is that which has been agreed plus any increases which have since occurred.
     
  12. 10in10years

    10in10years Member

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    Thanks Scott. I think I'll seek further legal advice tomorrow.
     
  13. jrc

    jrc Well-Known Member

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    If the tenant renewed the lease at the old rent then I would not be keen on your chances. Could be estoppel by conduct. Also you have cherrypicked two subclauses from the lease. Need to dee everything in the lease. By all means get a second legal opinion, but that lawyer will need to see the whole lease.
     
  14. 10in10years

    10in10years Member

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    Just checking back in guys. The other lawyer advised me that yes I do have a case as the contract was valid for that time, however the cost to re-coup the debt would be too high & this is peanuts compared to the sale of the building.