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Market rent review gone bad?

Warren Wackerling and Jodie Burnett Ė 25 August 2015

 

Introduction

 

Market rent reviews can be a nightmare, but even moreso can be missing a critical date and losing an opportunity to challenge a landlordís proposed market rent review.

 

The Facts

 

On a market rent review, the landlordís notice proposed a 22% increase of rent, amounting to more than a $230,000 annual rent increase (Landlordís Notice).The Landlordís Notice complied with provisions in their lease however, the tenant failed to respond with a notice disputing the landlordís proposed market rent within the time required but did give a notice outside the time permitted under the lease.

 

To the tenantís detriment, its dispute notice proposing a lower market rental was not accepted by the landlord as it was given out of time.

 

The tenant sought declaration of the Court that the Landlordís Notice was ineffective on several grounds including it did not advise the tenant of a right to obtain its own assessment, nor did it advise the tenant of consequences if the tenant failed to obtain its own assessment, including that the landlordís proposed market rent would be deemed to be the market rent.

 

The Landlord successfully upheld its own proposed market rent review relying on its compliance with the terms of the lease in response to the tenantís arguments.

The Court determined the Landlordís Notice was Ďentirely fit for purpose, and the tenantís arguments about its alleged defects or shortcomings are without merit

 

What do I need to be careful about?

 

As a tenant, you must be aware of steps necessary to challenge and landlordís proposed market rent review and act within what are often, very short timeframes.

 

Important dates must be noted to the decision makers, including time to prepare and time to respond to tasks, eg. market rent review dates, market rent review requests prior to exercise of option and just as important any date for exercise of an option to renew.

 

Be prepared early for any upcomingmarket rent review or options to renew and start the conversation early which may avoid late panic.Fail to plan, you plan to fail.

Download the decision here.

This article is for general information only and should not be relied upon as a substitute for specific legal advice.