Obtaining Vacant Possession of Commercial Property: An Overview for Landlords
7 September 2018
WHAT CAN A LANDLORD DO TO OBTAIN VACANT POSSESSION OF A PROPERTY FROM COMMERCIAL TENANTS?
The redevelopment and sale of commercial property is becoming a common feature of the Irish property market, given the recent uptick in the economy. Many properties in Dublin and beyond are occupied by corporate tenants who negotiated substantial concessions during the downturn.
As time and the economy move on, the terms of those leases have become increasingly unprofitable for many landlords. Disputes between tenants and landlords seeking vacant possession of property are now becoming a common feature of the Irish market.
So what can a landlord do to obtain vacant possession of a property from commercial tenants?
The avenues open to landlords in such circumstances vary, depending on the facts on the ground. The position where there is a current valid lease in place will be very different to that where there is a lease in place which has simply expired. In either scenario, the terms of the lease will be key to the course of action to be taken.
If the lease has expired, then the first step is to look at the terms of that expired lease. Some modern leases contain a notice provision to terminate the lease, which specifically applies after the lease has expired. If there is no such term in the lease, then the notice period will be calculated in accordance with the way the rent has been reserved under the lease. It is important to note that it is the way that the rent has been reserved which is critical, rather than how it is paid.
Once the appropriate notice period has been identified, a Notice to Quit must be served on the tenant. If a tenant refuses to vacate the property upon expiry of the notice period, then the next step is to issue proceedings in the Circuit Court for overholding.
BREACH OF TERMS
If the lease has yet to expire, then the terms of the lease should be examined to determine whether the tenant is in breach of any of its terms. In the absence of such a breach, a Landlord has no right to take back possession of the property from a tenant who occupies a property in accordance with an extant lease.
If the tenant is in breach of the lease, then they must be informed by the landlord of the breach and advised what they need to do to fix it. The tenant also needs to be given an appropriate amount of time to remedy the breach. If the tenant does not do so, then the landlord can issue forfeiture proceedings in the Circuit Court to eject the tenant from the property.
Depending on the circumstances, the landlord could also potentially exclude the tenant from the property by performing a re-entry (a potentially useful, but risky DIY remedy).
In some circumstances where the landlord is entitled to obtain vacant possession of the property and where there is an urgent need to do so, an injunctive application can be made to Court to return possession to the landlord within a period of weeks or months, rather than years as would be the case in ordinary proceedings to recover property from a tenant.
Obtaining vacant possession of a property via litigation can be both tricky and time consuming. There are several technical issues which can arise depending on the relationship between the landlord and the tenant, the existence of subtenants, the length of time the property has been occupied by the tenant, and the landlord’s overall plans for the property. Very often, a tenant will be allowed to stay in occupation of the property until all of these disputes have been resolved by the parties or determined by the Court. Such complications can have a significant impact on deadlines for closing the sale of a property, or for redevelopment works.
In those circumstances, it is important to obtain legal advice on obtaining vacant possession as early as possible, and to incorporate a litigation strategy in to any plans for the sale or redevelopment of commercial property occupied by tenants.
For further information on this topic please contact: Susan Deasy, Associate, Dispute Resolution,