S 133E Conveyancing Act and leases
Business Succession Update – Autumn 2013
Protecting the value of your business comes at a cost. Most commercial leases contain a provision that the lessee’s exercise of an option to renew is invalid if the lessee was in breach of the lease at the time of the purported exercise. Say the lessee is in arrears of his rent at the time of trying to exercise his option to renew.
Who needs a lawyer? Just write a letter and tell the tenant to go and start looking for a new landlord. Unfortunately it’s not that easy. The effect of sections 133E and s 133F of the Conveyancing Act is that a lessor cannot dispute the validity of the lessee’s exercise of an option to renew on the grounds that the lessee was in breach of the lease unless the prescribed notice in accordance with s 133E has been served on the lessee and either the lessee does not within one month apply for an order for relief, or if such proceedings are brought, no relief is granted or relief is granted on terms with which the lessee fails to comply.
So there are two sides to this coin. Firstly the lessor has to comply with s 133E and issue a prescribed notice, and secondly the lessee only has one month to apply for an order for relief after he receives it. But don’t see a lawyer on the last day of the thirty day period. It’s quite likely that he will be busy doing something else and won’t be able to help you.