Landlords of premises regulated by the Retail Leases Act 2003 (Vic) (RLA) should diarise the various dates needed for them to comply with their notice obligations under Sections 28 and 64 of the RLA, especially if they wish to avoid unintentionally extending the term of the lease. In this regard, even though the relevant lease document may clearly record the last day of the lease, that date may be extended by Sections 28 and 64, which may have consequences for a landlord who requires the premises to be vacated by a particular date.
Section 28 provides:
- If a lease contains an option exercisable by the tenant to renew the lease for a further term, the landlord must notify the tenant in writing of the date after which the option is no longer exercisable. That notice is to be given at least 6 months and no more than twelve months before the date the option is no longer exercisable (Last Date);
- However, the landlord is not required to provide that notice if the tenant exercises or purports to exercise the option before being notified of that Last Date;
- If the landlord fails to provide the notice to the tenant within the required timeframe, the lease is taken to provide that the Last Date is extended to a date which is 6 months after the date landlord notifies the tenant;
- If that extended date is after the term of the lease ends, the lease continues until the extended date;
- However, if the tenant exercises the option prior to the extended date, the new lease commences at the expiry of the old lease, rather than the total term of the lease being extended.
Consequently, an unplanned extension of the term of the lease may occur where a landlord fails to provide, or is late in providing, a Section 28 notice to the tenant and where the tenant does not eventually exercise its option.
Section 64 provides:
- If the tenant under a lease does not have an option to renew the lease for a further term, the landlord must at least 6 months but no more than twelve months before the lease term ends, give written notice to the tenant:
- offering the tenant a renewal of the lease on the terms specified in the notice; or
- informing the tenant that the landlord does not propose to offer the tenant a renewal of the lease;
- An offer to renew the lease cannot be revoked without the tenant’s consent for sixty days after it is made;
- If the landlord fails to give the notice within the required time frame:
- the landlord must give the tenant a notice containing that information; and
- the lease continues on the same terms and conditions until the day being 6 months after the notice was actually given to the tenant.
Accordingly, a failure by a landlord to give a Section 64 notice to a tenant may have the effect of extending the term of the lease (and, accordingly, the date upon which the premises may be vacated) to a date which is 6 months after receipt of the notice.
If you require assistance with regards to drafting and serving Section 28 and Section 64 notices (in accordance with the provision of notices clause in your lease) please contact Nevett Ford Melbourne.