Rent Review Notices
Commercial leases that include a ‘market rent’ review commonly allow a landlord to notify the tenant of the landlord’s estimate of the market rent and provide a limited window for a tenant to disagree with the landlord’s assessment of the market rent.
The importance of the tenant responding strictly within the required timeframe (if it disagrees with the landlord’s assessment of the market rent) was emphasised in the recent Queensland case of Sentinel Asset Management Pty Ltd v Primo Moraitis Fresh Pty Ltd.
In that case, the failure of the tenant to respond strictly within the time required by the lease (the tenant’s objection was one day late), meant that the landlord’s assessment of the new market rent applied.
Although the rent review clause didn’t expressly provide that time was ‘of the essence’ for the giving of notice by the tenant, the Court held it was sufficient that the lease clearly spelt out the consequences of non-compliance with the time limit.
Although the landlord was successful in that case, some of the arguments raised by the tenant also demonstrate that from the landlord’s point of view it is important to ensure that notices are delivered strictly in accordance with the terms of the lease.
Prepared by Tony Randall