What is a Default Notice?
Leases set out the rights and obligations of both the lessor and tenant. In situations where a party to the lease breaches their obligations, issuing a default notice is a critical stage in either remedying the breach or taking further actions under the lease. The provision of a valid default notice to a lessee is required before terminating a lease, even in situations where the lease itself does not require it.
A default notice most commonly takes the form of a written notice from the lessor to the lessee which usually sets out the following:
- the facts surrounding a breach of lease (commonly the non-payment of rent and/or outgoings);
- how the breach can be remedied;
- the timeframe in which the breach is required to be remedied; and
- the consequences of the breach not being remedied within the time.
Importance of Valid Default Notices
For a default notice to be valid and relied upon to take further actions, it must comply with the requirements of both the lease and legislation. Some of the most overlooked requirements for a valid default notice include:
- the notice must be able to be understood by the lessee;
- the notice should specify both the total amount owing and how this amount was calculated (if applicable); and
- if there is more than one way to remedy the breach, the notice should only state that the breach needs to be remedied. It will be for the tenant to then decide how to remedy this breach.
The consequences of relying upon an invalid default notice can be severe. In circumstances where the lessor relies on an invalid default notice, terminates the lease and re-enters the premises, the lessee may be able to bring a claim against the lessor for damages.
Pragma Lawyers offers a fixed fee service for issuing default and termination notices which comply with the requirements of the lease and any relevant legislation.
We can also assist in the lock-out process as well as the recovery of unpaid rent and other charges under the lease.