perform or get out default remedies - mason hayes & curran · of terminating the lease •...
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Perform or get out – Default Remedies @mhclawyers Thursday, 05 November 2015
Speakers and topics
Eimear Collins Partner, Dispute Resolution Topic – Remedies against Defaulting Commercial Tenants Peter Johnston, Senior Associate, Dispute Resolution Topic – The Residential Tenancies Act, 2004 Chaired by Michael Doran Partner, Real Estate
Remedies against Defaulting Commercial Tenants
Eimear Collins Partner, Dispute Resolution Mason Hayes & Curran
Common Breaches
Tenant Breaches
Arrears of Rent
Arrears of other
sums reserved
under lease e.g.
Service charges,
rates and insurance
premium
Breaches of non –
financial covenants
e.g. - user clause
- repair clause
- consent provisions
Breaches of
financial
covenants
Remedies Arrears of Rent/other sums
Obtain Court
Order for
Possession
Re-enter if
provision in Lease
or if breach of
condition in lease
Sue for
arrears only
Petition to wind
up tenant
company
Suing for arrears of rent/other sums
Summary
Proceedings
High Court –
Above €75,000
Circuit Court –
€15,0001 – €75,000
District Court –
Up to €15k-
• Must be able to evidence that sums are due and owing and
outstanding. Any agreements regarding payment of arrears
at end? Post dated cheques? Credit for part payments made?
• Guarantors? Financial standing of tenant?
• Lease still in existence after court order made
• Landlord can keep suing for arrears of rent as rent falls due
Petition to wind up tenant company
• Usually threat to petition to prompt payment
• Expensive
• No priority
• Remain unsecured Creditor
Lease Termination by Court Order – “Rent” Arrears
Issue
Proceedings
seeking Court
Order for
possession
“Rent” must be
outstanding for
one year
minimum
District
Court –
€15,000
rent
Circuit
Court –
R.V. less
than
€253.95
High Court
– R.V. in
excess of
€253.95
Express
provision to
terminate
lease/Breach
of condition in
lease
OR
*(it is common for service charges, insurance premiums to be
reserved as additional “Rent”
Remedies non financial breaches
Order compelling
tenant to perform
Damages and Order
compelling tenant to
perform
Order for possession
if provided for in
lease/breach of
condition in lease
- Breach of user
covenant
- breach of repair
- Breach of keep
open covenant
- Failing to keep
within demised area
- Failing to use
correct entrance
- Failing to obtain
Landlord consent
Consider if
interlocutory
injunction
required
Overview
Peaceable Re-entry
• is a fast, effective & economical way in which to terminate commercial lease
and obtain possession
• No Court order required/”self help” remedy
• Less legal fees
• Less “waiting time”
• However commercial tenants taking steps to try to prevent landlord’s
exercising this option
Current attitude of landlords/receivers
• Substantial increase in number
• Willingness to consider re-entry in complex scenarios – (traditionally
confined to shopping centres)
• Créches
• Hotels
• Hostels
• Licensed premises
• Serviced offices/offices
• Part residential
• Commercial alternative to issuing proceedings for possession
What is peaceable re-entry
• Landlord/agent physically re-enters a commercial premises for the purposes
of terminating the lease
• Service of a notice not sufficient
• Must actually get onto/into the premises – outside premises not sufficient -
MacKnight –v-Xtra-Vision
• Most common way is to gain entry through front entrance and then change
all the locks
Is there a right to re-enter the premises?
• Identify breach
• Check if breach gives a right to re-enter to terminate lease/breach of
condition.
• Does a section 14 notice need to be served – all breaches other than non-
payment of rent
• In writing
• Specify breach
• Specify what required to remedy breach
• Call upon tenant to remedy in reasonable timeframe
• If not remedied landlord will re-enter and determine lease
Procedure
• Verified that you have right to re-enter?
• Suitable premises – residential aspects, perishable goods, environmental
issues, licenced premises?
• Element of surprise - Usually a late night/early morning procedure to try to
ensure no one in the premises!
• Peaceable If have a key to premises use it!
If not - cause minimal damage in gaining entry – bore
through the barrel of lock
If there is resistance, do not proceed
• Secure premises once entry gained
• Letter to former tenant notifying it of re-entry/lease termination
LANDLORD TENANT SUB TENANT
(OF TENANT)
GUARANTOR
(OF TENANT)
MORTGAGEE
(OF TENANT)
Tenancy ends
once landlord
peaceably
re-enters the
premises.
Tenant’s interest
ceases once
premises is re-
entered by
landlord –
tenant still liable
for breaches
pre-termination.
Subtenant’s
interest ceases.
Guarantor’s
liability re: future
rent and
covenants in
lease ceases
unless express
provision of
lease states
otherwise.
Mortgagee’s
interest ceases
as the asset no
longer exists.
Legal Effect of Termination
What can a tenant do?
• Relief from forfeiture / injunction – even if all procedures have been properly
followed
• Damages
• Deal
Summary
• Landlord has effective remedies
• May compel performance
• Breach may be grounds upon which to terminate
• If terminating consider whether Court Order or “self help” re-entry
Why Peaceably Re-enter?
• is a fast, effective & economical way in which to terminate
a commercial lease and obtain possession
• No Court order required/”self help” remedy
• Less legal fees
• Less “waiting time”
The Residential Tenancies Act, 2004
Peter Johnston Senior Associate, Dispute Resolution Mason Hayes & Curran
Laffoy J in Canty v PRTB [2007] IEHC 243
“"an extremely complex
piece of legislation”
"very technical and
confusing".
• Pay Rent
• Reasonable access to inspect the dwelling
• Reasonable access to repair the dwelling
• Notify Landlord of any defect in the dwelling
• Not to engage in antisocial behaviour
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Tenant’s Obligations
• If there is a written lease - what are its terms?
• Market Rent
• Once a year & not in the first 12 months
• Substantial change exception
• Procedure: a) Notice
b) Notify PRTB
c) Dispute / Proofs
24
Rent & Rent Reviews
Part IV Tenancy
25
• 6 months continuous occupation
• No notice of termination served
• Entitled to a further 3 ½ year tenancy
• Can only be terminated on 6 express grounds
• The terms of the 6 month occupation will apply, unless
varied by agreement
• Fixed Term Tenancies?
1. Tenant has failed to comply with the obligations (must allow a
cure period)
2. Landlord intends to sell the dwelling within the next 3 months
3. Dwelling is no longer suited to the needs of the occupying
household
4. Landlord requires the dwelling for own or family member
occupation
5. vacant possession is required for substantial refurbishment of
the dwelling
6. the landlord intends to change the use of the dwelling.
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Termination of Part IV Tenancy
Non Payment of Rent
14 day notice
advising of
arrears of rent
14 day notice
warning LL
may terminate
Termination notice
28 day notice to
vacate
• Refer dispute to PRTB:
- arrears cannot exceed €20,000; or
- twice the annual rent to a max of €60,000
- if the arrears exceeds these amounts – Court
• What it the tenant doesn’t leave?
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Non Payment of Rent
Termination of Part IV Tenancies - Notice Period
Duration of Tenancy Notice by Landlord Notice by Tenant
Less than 6 mths 28 days 28 days
6 mths – 1 yr 35 days 35 days
1 yr - 2 yr 42 days 42 days
2 yr – 3 yr 56 days 56 days
3 yr – 4 yr 84 days 56 days
4 yr + 112 days 56 days
Contents of Landlord’s notice of termination
• be in writing
• signed by Landlord or its authorised agent
• specify the date of service of it.
• state the reason for termination if the duration of the tenancy is for a
period of more than 6 months
• specify the termination date- date tenancy will terminate and the
date tenant must vacate the dwelling
• state that the tenant has the whole 24 hours of the termination date
to vacate the dwelling
• state that any issue as to the validity of the notice of termination or
the right of the landlord to serve it must be referred to the PRTB
under Part 6 within 28 days from the of receipt of it.
31
Termination of Fixed Term Tenancies
• Mutual agreement?
• Is the tenant in default of statutory or lease provisions?
• If there is no default or break option, there is no entitlement to
terminate during the fixed term
• Notice of termination:-
- in writing
- signed by the landlord / landlord’s agent
- date of termination
- 24 hours to vacate on the termination date
- date of service
Dispute Resolution
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Tenancy
Tribunal
Adjudication
Mediation
• Determination Orders / Binding
• Reliefs
• Enforcement
Contact Details
Peter Johnston Senior Associate Mason Hayes & Curran t: +353 1 614 5282 e: [email protected]
Thank you For any queries on upcoming events, please contact [email protected] @mhclawyers