BEWARE OF THE MONTHLY TENANCY – It may be longer than you think
We have mentioned this aspect of the Retail Shop Leases Act in the past, but feel that now would be a good time to reiterate the position as we understand it.
- If you allow a tenant into possession, accept rent, and they remain longer than six months without a formal Lease agreement, a five (5) year Lease is automatically created at law under Section 20B (with only a few minor exceptions).
- Probably on the same terms as the monthly tenancy (ie. no rent reviews).
- No specific right for the landlord to sue for damages.
- No specific obligation for the tenant to insure against public risk.
- No specific obligation for the tenant to maintain fixtures and fittings
The only way to avoid this uncertainty is to arrange for a formal written Lease to be executed by the parties, or to ensure that the tenant obtains a certificate from a lawyer excluding the provisions of Section 20B.
If you would like a bit more information, we have prepared an Information Sheet which sets this out in more detail, so just send us an email and we will forward one to you.