For both landlords and tenants, entering into a lease is a significant legal and financial commitment. Disputes frequently arise between landlords and tenants over leasing matters. So, as a landlord in Australia, if a tenant fails to perform their obligations, what legitimate grounds does the landlord have to terminate the lease agreement and evict the tenant? What are the methods of terminating a lease agreement? Before evicting a tenant, what obligations should the landlord fulfil? If the tenant has not breached the agreement, can the landlord still terminate it? This article has the answers.

Determining Whether the Tenant Has Breached the Lease Agreement

As a landlord, the first step in understanding whether you have the option to terminate a lease agreement is to review the lease agreement itself. The landlord then needs to determine whether the tenant’s conduct constitutes a serious or substantial breach of the lease agreement. When reviewing the lease agreement itself, the first thing to check is whether the lease contains a breach clause.

1. The Lease Contains a Breach Clause

Generally speaking, leases will include a breach clause, which sets out the circumstances or tenant conduct that constitute a breach of the agreement. These breaches include failure to pay rent amounts specified in the lease terms, and whether the breach may give the landlord grounds to terminate the agreement.

Breaches sometimes also include situations where the tenant has not directly engaged in a breach, but the tenant’s status means they can no longer continue to comply with the lease. For example: the tenant is a company and has entered into liquidation.

2. What If the Lease Does Not Contain a Breach Clause?

If the tenant engages in conduct that refuses to perform the lease agreement, and the tenant indicates that they are no longer willing to be bound by the agreement, then the landlord has grounds to terminate the contract. For example, after signing the lease agreement, the tenant does not move into the property and pay rent for a long period of time. In that case, the landlord has grounds to terminate the agreement. In addition, breaching a term that is essential to the contract may also entitle the landlord to terminate the agreement.

If the Tenant Has Not Breached the Agreement, Can the Landlord Still Terminate the Lease?

A landlord can terminate a lease or lease agreement in various ways, without needing to establish whether the tenant is in breach. However, most of these methods require the tenant’s consent or that sufficient notice be given to the tenant. For example, this may include where the landlord plans to demolish or renovate the property, and the lease contains relevant clauses that permit this.

What Termination Clauses Are Typically Included in a Lease Agreement?

What termination clauses are typically included in a lease agreement? In other words, what are the methods of terminating a lease or lease agreement?

1. Early Termination (Unconditional)

As long as the landlord and tenant have agreed in writing to permit early termination of the lease, both parties can agree to terminate the lease early.

2. Early Termination (With Notice)

The tenant or landlord can terminate the lease at any time, but termination will only take effect after notice has been given.

3. Termination for Breach

If either the landlord or tenant commits a material or serious breach of the lease, such as causing significant damage to the property, becoming insolvent/bankrupt, or engaging in illegal or dangerous conduct, the other party may terminate the lease.

4. Termination for Breach (With Notice)

If the tenant commits a minor or non-serious breach of the lease and fails to remedy the breach within the given notice period, the landlord may terminate the lease. These types of clauses typically cover non-payment of rent.

5. Surrender Clause

The tenant may surrender their rights under the lease early, provided that the tenant compensates the landlord for the lost rent, commonly referred to as a surrender fee.

6. Termination (Refurbishment or Demolition)

If the landlord plans to carry out significant refurbishment of the property or demolish it, they may terminate the lease. The landlord may be required to give sufficient notice, and may even have to compensate the tenant for relocation and other costs, in order to comply with the applicable laws.

Before Evicting the Tenant, What Obligations Should the Landlord Fulfil?

Once the landlord determines that the tenant has committed a breach, they should provide the tenant with formal written notice and give the tenant an opportunity to remedy the breach. The notice issued by the landlord to the tenant for the purpose of remedying the breach should set out the following:

The facts of the breach;

How the tenant should remedy the breach;

The period within which the tenant must remedy the breach;

The consequences of failing to remedy the breach.

The landlord’s lease agreement may set out provisions relating to remedying breaches, for example, setting a standard period within which the tenant must remedy the breach. If the specified period for remedying the breach has expired, the landlord will have grounds to evict the tenant.

Note: If the tenant seriously breaches the agreement, for example by causing significant damage to either party or engaging in illegal or dangerous conduct, the landlord may terminate the lease without notice.

Final Thoughts

Disputes of various kinds often arise between tenants and landlords over lease agreements. If the tenant commits a breach and the landlord wishes to terminate the agreement but fails to follow the correct process, this can lead to more serious disputes and financial losses, and even substantial legal costs. It is therefore very important to understand the relevant considerations in terminating a lease agreement. If you have any related questions, it is recommended that you seek the assistance and guidance of a qualified legal professional.