Landlords: Options When Faced With A Statutory Tenancy Claim

Author:Mr Keith Smith, Michael Twomey and Simon Hannigan
Profession:Arthur Cox
 
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When faced with a commercial tenant claiming that they have a statutory right to renew their tenancy, what options are available to a landlord?

Irish legislation gives certain commercial tenants the right to claim a new tenancy when the term of their current tenancy is about to expire or has recently expired. The impact of a claim to a new tenancy can potentially be very significant for a landlord.

Pending the resolution of the claim, the tenant can remain in occupation of the premises at the rent payable under the old tenancy, which may be less than the market rent at the time. Even if the tenant is ultimately unsuccessful in the claim, the landlord cannot later recover the difference in the rent paid by the tenant and the rent the landlord could have obtained on the open market. A tenant who is successful in claiming a right to a new tenancy can continue in occupation of the premises at a market rent payable from the date the old tenancy ended.

There are, however, steps that a landlord can take to defeat a statutory tenancy claim or to seek to prevent a statutory tenancy claim arising in the first place.

PREVENTING A CLAIM

Landlords can avoid the creation of a statutory tenancy if a tenant or prospective tenant renounces their right to a new tenancy by deed of renunciation.

To be enforceable, the deed of renunciation must be in writing and must be clear and precise. The tenant must also have received independent legal advice specifically on the renunciation (as opposed to the lease generally) before signing the deed. Deeds of renunciation can be entered into before or after the commencement of the tenancy. However, it is preferable from the landlord's perspective for the deed of renunciation to be executed before the tenancy begins.

DEFEATING A CLAIM: ACTIONS BY THE TENANT

Statutory tenancies can be defeated without the need to pay compensation to the tenant where:

the tenancy has been terminated because of non-payment of rent or breach of covenant by the tenant; the tenant has terminated the tenancy by notice of surrender or otherwise; or »» the landlord has "good and sufficient reason" for refusing to renew the tenancy (the reason must relate to the actions or conduct of the tenant). DEFEATING A CLAIM: REDEVELOPMENT OR REBUILDING

A landlord may also be able to defeat a claim to a statutory tenancy if he or she:

intends to rebuild or reconstruct the building(s) or part of the building(s) comprising the premises, and has planning...

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