When landlords and tenants enter into a tenancy agreement, there is usually an intention to see it through to the end. However, there are certain instances where your landlord has the right to terminate, or cancel, your lease. As a tenant, you must be aware of these grounds to avoid eviction from your business premises. This article will outline the grounds for termination in New Zealand, and the processes your landlord has to follow to invoke this right. 

Grounds for Termination

Your landlord can invoke their right to terminate your lease in specific circumstances. These circumstances are usually to do with the tenant’s actions. These rights are available regardless of whether you have a long term lease, a fixed-term tenancy or a periodic tenancy. These grounds are:

  • failure to pay rent for a specific period;
  • breaching a term of the lease;
  • demolition or renovation; and 
  • frustration. 

Failure to Pay Rent

Your landlord may have a right to terminate your lease if you fail to pay rent on time. However, to do so, the rent must be overdue for no less than ten working days. A failure to pay rent does not automatically terminate your lease. Your landlord must serve you a written notice that indicates their intention to cancel the lease. This notice should contain:

  • that there has been a failure to pay the rent;
  • the amount you must pay to compensate for the rent due; 
  • the period within which you must pay the rent. This must be no less than ten working days after the landlord provides notice to you; 
  • that, if you do not pay the rent, the landlord may seek to cancel the lease; and 
  • your right to apply to a court for relief against the cancellation of your lease. 

Your landlord could only apply to a court for an order to terminate your lease agreement if, at the expiry of the notice period, you had not paid the rent.

Breach of Terms

Your landlord also has a right to terminate if you breach a condition of your lease. Such a condition may be not to damage the property or repair any damages made to the premises. 

Your landlord can invoke this right to cancel if they have given you a notice of their intention to terminate your lease. This notice has to adequately inform you of the:

  • nature and extent of the breach; 
  • if the landlord believes there is something you can do or stop doing, how you can resolve the breach. For example, paying for the damage done to the property, and the amount of compensation you should provide;
  • a reasonable period within which you should resolve the breach; and 
  • an acknowledgement of your right to apply to a court for relief against the cancellation of your lease. 

Your landlord can only then apply for an order to terminate your lease if, at the end of the period specified in the notice, you have not remedied the breach. 

This notice of an intention to cancel is not invalidated if your landlord does not include certain information. For example, a court may still see the notice as valid even if it does not specify that the tenant can remedy the breach by payment or provide an amount of compensation. 

It is best practice to be informed of your lease contents to ensure that you do not breach a condition. 

Demolition or Renovation

Your landlord is entitled to terminate your lease if they wish to either demolish or renovate the premises. 

However, this right is only available if your lease contains a ‘demolition clause’. Such a provision will outline what process your landlord has to follow, and how many days notice they must give you before terminating your lease. If your landlord wishes to terminate your lease based on demolition or renovation, look through your lease to ensure that they have a right to do so and have followed the appropriate procedure. 

Frustration

Like a business contract, there may be instances where your lease cannot continue due to some unforeseen and intervening event. If such an instance were to happen, your lease would become frustrated, and both you and your landlord would have a right to terminate it. 

These situations are relatively uncommon. For your landlord to terminate your lease based on frustration, there would have to be no other substantial use of the premises available to you as a tenant. Leases will usually account for what your landlord will do when a natural disaster, such as an earthquake, damages your premises and prevents you from operating out of it. 

Key Takeaways 

Your landlord is not able to terminate your lease whenever they want to. They can only invoke this right in certain circumstances, such as if you fail to pay rent or breach a condition of the lease. Furthermore, your landlord must serve you a notice of their intention to cancel, and apply to a court for an order to terminate the lease, before evicting you. Some situations are not related to your conduct, such as if your landlord wishes to demolish or renovate the building. 

If you believe that your landlord has unfairly terminated your lease, get in touch with LegalVision’s tenancy lawyers on 0800 005 570 or complete the form on this page. 

FAQs

Can an owner break a rental lease?

An owner of a rental premise can break, or terminate, the lease. However, they must have grounds to do so.

What does terminating a lease mean?

Terminating a lease means to end the lease before its expiration, and to evict the tenants of that property.

How does a landlord end a tenancy agreement?

A landlord will end a commercial lease by applying to a court for an order to terminate.

What will terminate a lease?

A tenant failing to pay rent for a specific period, or breaching a condition of the lease, will usually be grounds for termination.

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