1. Commercial Leases:
Hot Topics
29 April 2014

2. Commercial Leases:
Hot Topics
Chair
Kevin Hoy,
Head of Real Estate

3. Time to Split - Exercise of Break Options
Nicola Byrne,
Senior Associate e:

5. Law No statutory framework No Irish reported case law
No standard form lease break option provisions
No industry accepted or endorsed code of practice
Governed solely by law of contract
UK case law of persuasive authority

6. Example of a Break Option Clause
“The tenant shall be entitled to terminate this Lease on 30 April
2015 (“the break date”) strictly subject to compliance with the
following terms and conditions:
(a) service by the tenant of at least twelve months’ prior written
notice on the landlord;
(b) discharge by the tenant of the rent and all other outgoings
payable under the lease up to the break date; and
(c) compliance by the tenant of all of the tenant’s covenants and
conditions under the lease up to the break date.”

7. Service of Notice
Identity
Authority
Timing
Service

8. Discharge of Payments, Rent and Outgoings
Break payment
Rent and outgoings
Apportionment and overpayment
Cleared funds

9. Compliance with Covenants and Conditions
Subsisting breaches
Materiality
Repair and decoration
Alterations
Vacant possession

10. Estoppel Landlord action or inaction can affect its legal position
Landlord strategic response to tenant engagement
Landlord estopped from denying tenant compliance by virtue of encouraging, or acquiescing in, tenant’s non-compliance

11. Takeaways Take timely legal advice
Identify the full nature and extent of tenant’s obligations
Engage strategically with tenant

13. Keeping the Peace: Re-Entry of Commercial Premises
Eimear Collins,
Partner e:

14. Overview Effective, Speedy, Economical
Way for a landlord to get back vacant possession of a leased premises
Without the necessity of obtaining any court order for possession

15. Overview Can be stressful, intensive time
Landlord should take legal advice in advance of re-entry to minimise risk and exposure

16. Current attitude of landlords
Substantial increase in use of re-entry as a method of terminating lease
Willingness to consider re-entry even in complex scenarios
Alternative of issuing proceedings not commercial or timely

17. Framework Common Law – very limited right to re-enter
- confined to conditions in leases only
- “on condition that”, “provided that”
Terms of lease – Does it give an express right to re-enter?
Section Conveyancing Act
Landlord and Tenant (Ground Rents) Acts
Caselaw
- Main Irish case - Sweeney Ltd –v- Powerscourt Shopping Centre Limited [1984]

18. What is re-entry?
It is where a landlord physically re-enters a demised premises for the purposes of terminating the lease
Service of a notice in itself is not sufficient
Must actually get into the premises – no other act is sufficient

19. When can a landlord re-enter?
Expressly provided for in lease
Common law – limited right to re-enter

20. Legal effect of termination by re-entry
LANDLORD
TENANT
SUB TENANT
(OF TENANT)
GUARANTOR
MORTGAGEE
Tenancy ends once landlord peaceably
re-enters the premises.
Tenant’s interest ceases once premises is re-entered by landlord.
Subtenant’s interest ceases.
Guarantor’s liability re: future rent and covenants in lease ceases unless express provision of lease states otherwise.
Mortgagee’s interest ceases as the asset no longer exists.

21. So when is it an effective tool?
Tenant in breach
Lease/common law permits re-entry
Landlord satisfied to release tenant/guarantor
Landlord wants vacant possession
Business being run from demised premises is conducive to re-entry

22. Section 14 Notices In writing Addressed and served on tenant
Specify breach
Specify remedy
Call on tenant to remedy breach
Give reasonable time

23. How to minimise risk Obtain legal advice
Consider issues/barriers to re-entry in respect of the specific premises
Keep element of surprise
Keep it peaceable

24. How to minimise risk
Solicitor send letter to former tenant post re-entry
Give tenant back its goods
Keep it simple post re-entry

25. Actions tenant can seek to bring against landlord
Relief from Forfeiture – Can be obtained even if landlord has done everything correctly
Damages
- re-entry not procedurally correct
- goods which perished

26. Limitations/drawbacks/risks
Not a universal panacea
Commercial leases only
May still have to sue tenant/guarantors
Relief from forfeiture
Title

27. Tenants Suing Landlords
Eamon Marray BL

28. Q & A Nicola Byrne, Senior Associate e: nbyrne@mhc.ie Eimear Collins,
Partner e:
Kevin Hoy,
Head of Real Estate e: