Rental arrears are one of the more serious issues a commercial landlord can face. Acting early and following the correct process is important to protect the landlord’s position.
So, what happens when a commercial tenant stops paying rent in Queensland?
Start with communication
When a payment is missed, the first step is generally to contact the tenant.
There may be a simple explanation, or the missed payment could be an early indication that the tenant is experiencing financial difficulty.
Early communication gives the landlord and property manager an opportunity to understand the situation before arrears continue to grow.
Review the lease
The commercial lease should then be reviewed carefully.
It will usually set out when rent is due, what constitutes a breach, whether interest applies to overdue amounts and what rights the landlord has if the tenant defaults.
Importantly, landlords should not simply change the locks or take possession because rent hasn’t been paid.
Issuing a Notice to Remedy Breach
Under Queensland’s Property Law Act 2023, a landlord wishing to exercise a right of re-entry for a breach will generally need to issue the tenant with the prescribed Form 7 – Notice to Remedy Breach.
The notice identifies the breach, requires the tenant to remedy it within a reasonable period and advises that the landlord intends to terminate the lease if the breach is not remedied.
The legislation also contains requirements around providing copies of the notice to certain other parties associated with the
lease
What if the tenant still doesn’t pay?
If the breach isn’t remedied within the required period, the landlord may have further options under the lease and Queensland legislation, including terminating the lease, recovering possession and pursuing amounts owed.
The appropriate action will depend on the lease and the individual circumstances, so legal advice should be obtained before taking steps to terminate a lease or regain possession.
Good commercial management makes a difference. Rental arrears are much easier to manage when they’re identified early.
At My Agent Aus, we closely monitor rental payments, communicate with tenants when issues arise and keep our landlords informed throughout the process. Where a breach escalates, we can also assist in coordinating the appropriate notices and professional advice.
Own a commercial investment property? Contact My Agent Aus to find out how proactive commercial property management can help protect your investment.
This article provides general information only and should not be relied upon as legal advice.