The right way to terminate a lease or letting agreement

The right way to terminate a lease or letting agreement
3
Dec

Termination of residential tenancies

Landlord and Tenant

A topical point in respect of residential tenancies is how to end or terminate a lease or letting agreement of a residential property.

Part 5 of the Residential Tenancies Act, 2004 brought in very detailed provisions, the principal effects of which are to protect a Tenant of a residential dwelling from unilateral termination of a letting by his or her Landlord.
To terminate a tenancy a Landlord must serve a Notice of Termination, in a form that complies with the Act, on the Tenant.

Under Section 62[1] the Notice of Termination to be valid shall:-

[a] be in writing.
[b] be signed by the Landlord or his/her agent.
[c] specify the date of service.
[d] specify the reason for termination if the tenancy is for a period more than 6 months.
[e] specify the date on which the tenancy will terminate and the date on which the tenant must vacate the property.
[f] state any issue with regard to the service or validity of the notice must be referred to the Private Residential Tenancies Board within 28 days from the date of receipt of the Notice by the tenant. Section 66 of the Act sets out in detail the periods of notice to be given where the letting is either terminated by the landlord or by the tenant. These periods are as follows:-

Length of tenancy Notice period

Termination by Landlord

Less than 6 months 28 days

6 or more months but less than 1 year 35 days

1 year or more but less than 2 years 42 days

2 years or more but less than 3 years 56 days

3 years or more but less than 4 years 84 days

4 or more years 121 days

 

Termination by Tenant

Less than 6 months 28 days

6 or more months but less than 1 year 35 days

1 year or more but less than 2 years 42 days

2 or more years 56 days

Under Section 67, Landlords can give less notice if the tenants are in breach of their obligations under the tenancy, such as serious anti-social behaviour and non-payment of rent. However, in such cases, the tenant following receipt of the notice has 14 days in which to pay the rent to avoid the notice being enforced.
Landlords and Tenants of residential properties are urged in full to acquaint themselves first hand with the provisions of Part 5 of the Residential Tenancies Act, 2004, and with the expertise of our firm in this whole area, we will be happy to assist with and advise on any concerns.

Commercial Leases – Abolition of “upwards only” Rent Review Provisions

A topical area in recent years in respect of commercial leases, relates to the abolition of “upwards only” rent reviews.
There are virtually no commercial leases in existence in this country in excess of 10 years in duration which do not have a rent review clause. The most common form of long term leases would be a 21 year or 35 year lease which would provide for the rent to be reviewed every five years.

Prior to the coming into force of the Land & Conveyancing Law Reform Act, 2009, almost all commercial leases in their rent review clauses provided for rent to be reviewed “upwards only”.

Accordingly, at a rent review, it was merely a matter of by how much the Tenant’s rent would be increased.
The Land & Conveyancing Law Reform Act, 2009 came into force in this regard on the 28th of February 2010. Section 132 of that Act provided that, in any lease entered into after that date, the rent payable at a rent review “may be fixed at an amount which is less than, greater than, or the same as the amount of rent payable immediately prior to the date on which the rent falls to be reviewed …… notwithstanding any provision to the contrary contained in the lease or any agreement for the lease …”.

Thus, even where a commercial lease entered into after the 28th of February 2010 contains a rent review “upwards only” clause, such a clause will not be binding on the parties. The rent can be fixed at the review at a sum “less than, greater than, or the same as the existing rent” based on the open-market at that time.

Tenants in commercial leases entered into before the coming into operation of the Act however, remain bound by “upwards only” clauses.
Since the coming into force of the Act stepped rent provisions have been employed as one means of trying to get around the provisions of the Act and provide for an increase in rent to the Landlord. This is where the Rent Clause in the Lease will set out precisely the increased annual rent to be paid as the term of the lease progresses.

However, such provisions can only be of limited advantage to a landlord given that it is not known what the market will be in say ten years time, or longer, and thus, to employ a stepped rent revision looking too far ahead may rebound badly on a Landlord or indeed a Tenant as the case may be, depending on what is contained in the provision.

Accordingly Section 132 of the Land & Conveyancing Law Reform Act, 2009 and its abolition of “upwards only” rent review clauses has had a major effect in the whole area of rent reviews in commercial leases.

Written by Simon J , Murphy, Partner