Commerical lease - Form 7 Lease Breach Notices
A lease breach notice is a formal notification from a property owner or manager indicating that the tenant has failed to comply with certain terms of the lease agreement. It’s not a penalty in itself, but rather a formal wake-up call to correct any violations promptly.
Remedy to breach notices, lockouts, and evictions have consistently ranked among the top five reasons for disputes submitted to the Queensland Small Business Commissioner (QSBC) over three financial years from 2022 to 2025. In the 2024-25 financial year, nearly 20% of mediations facilitated by the QSBC involved disputes related to commercial lease notices, lockouts, or evictions.
The Property Law Act 2023 (PLA) sets out the requirements for a Form 7 Notice to Remedy Breach (a Form 7 Notice). They are usually written up by lawyers and sent in the method specified in your lease.
Scenarios That Might Trigger a Breach Notice:
- Late rent payments or consistent short payments.
- Unauthorised use of the premises.
- Failing to maintain the property as agreed upon in the lease.
- Failing to notify the landlord of any changes in directorship as agreed upon in the lease.
A breach notice can be issued by the landlord for any unmet obligation that a tenant has under the lease.
Responding to a Breach Notice:
It’s important to take a breach notice seriously and act immediately. The notice will outline the specific terms breached and outline the steps to remedy the breach. Landlords must consider the nature and extent of the breach, in determining the reasonable time for a breach to be remedied (PLA section 153(2)). There are no set timeframes in legislation for each type of breach (e.g. unpaid rent or outgoings). The time you have can vary and will be specified in the breach notice. If you remedy the breach (for example pay the outstanding rent), the matter is generally considered resolved and the lease will continue.
If you receive a breach notice check if the notice is defective (e.g.missing information required by law) and if so, seek legal advice immediately on how to challenge the notice either directly with who issued it or through a court or tribunal.
If you disagree with the breach described in the notice (e.g. you dispute the amount owed) seek legal advice on how to stop further action being taken before the dispute can be settled. For leases under the Retail Shop Leases Act 1994, you may need to apply for an urgent interim injunction order to prevent being locked out before resolving the dispute. Learn more in our article: Understanding Interim Injunction Orders in Lease Disputes.
Sometimes you may be knowingly breaching the lease due to another issue that is in dispute (e.g. withholding rent until the airconditioning is fixed). Read our factsheet: Not Paying Rent. You should seek urgent legal advice in these situations because there have been previous cases where courts or tribunals have not looked favourably on tenants intentionally breaching the lease to try and resolve another issue. You may be better served trying to negotiate rent abatement separately – check out our article: Asking for Rent Relief if Commercial Property is Damaged or Unusable. Seeking advice on whether a tenant can breach the lessor to try and remedy the issue, instead of withholding rent, is strongly advised.
If You Cannot Remedy a Breach Notice:
Once the breach notice expires, the landlord could take further action. This can include:
- Issuance of a Final Warning: The landlord may issue a final warning, stressing the need for the breach to be rectified.
- Lease Termination: If the terms of the lease agreement allow, the landlord might terminate the lease. This would generally require the landlord to provide a notice of termination to the tenant.
- Lock out: In some cases, the landlord may enforce a forfeiture clause to take back possession of the premises and lock the tenants out.
If a tenant abandons the premises, the lessor may not need to give the tenant a Form 7 Notice or go to court to take back the property, but they must notify each ‘designated person’ whose name and address is known to them. Even after you are locked out of the premises or the lease has been terminated, the landlord may still initiate legal proceedings to recover any financial losses incurred.
How to seek help:
Tenants who find themselves unable to rectify a breach could try these steps to seek a resolution:
- Communicate with the Landlord: It may still be possible to discuss the situation with the landlord and negotiate either an extension of the remedy period or a payment plan.
- Seek Professional Advice: Tenants should consider seeking legal advice or assistance from a tenant advocate service to understand their options.
- Apply for mediation: The Queensland Small Business Commissioner (QSBC) offers a mediation service for leasing disputes.
Essential Tips:
- Don't ignore the notice.
- Address the issue promptly.
- Maintain communication.
- Get help.
Bald Truth Videos on Breach Notices and Lock Outs
Our Director of Assistance, Peter Maddock, shares his expertise in these concise, 1-minute videos to help you navigate the challenges of commercial leasing.
To discuss your situation, and get connected with people that can help, reach out to our Assistance team.
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