What to do when the landlord-tenant relationship sours

communication becomes sporadic, and operational concerns begin to signal deeper financial or legal problems. These situations require prompt and strategic decision-making by landlords. While retail leasing laws differ across Australia, the key pressure points for landlords remain the same. This article provides a practical roadmap for navigating common challenges, including default, termination, relief against forfeiture applications, and how landlords might respond when tenants raise counterclaims during enforcement. 1. When can landlords terminate a retail lease? Termination rights generally arise from non-payment of rent, breaches of essential terms, repeated defaults, abandonment, or certain insolvency events. In most cases, the issue is not whether a landlord has a right to terminate, but whether that right is exercised correctly. For landlords, termination is often effected by enforcing the right of forfeiture; that is, bringing the lease to an end and recovering possession of the premises. This process is technical, and even a landlord with a legitimate grievance can still lose its position through a defective notice, premature re-entry, or by conduct that amounts to waiver of the tenant’s breach. Most leases and relevant property legislation require the landlord to issue a breach notice before termination, particularly for breaches other than non-payment of rent. The notice must clearly identify the breach, specify the steps the tenant must take to remedy it, and allow the required statutory or contractual timeframe. A vague or defective notice can unravel the entire termination process and give the tenant grounds for dispute. The table below sets out the minimum statutory period a landlord must provide in each state for a tenant to remedy a breach before termination can occur. Landlords should also take care not to inadvertently waive their termination rights. Continuing to demand or accept rent after issuing a breach notice can affirm the lease and prevent termination. It is also important to remember that ending a lease does not automatically result in the tenant vacating or surrendering possession of the premises. Depending on the lease terms and the state legislation, a landlord may have a right of re-entry or may need to seek possession through court or tribunal proceedings. Re-entering too early, changing locks prematurely, or taking informal possession steps without strict compliance can expose landlords to claims for wrongful termination, damages, and applications for relief against forfeiture. Key actions for landlords Review the lease, including default clauses, notice requirements, method of service and remedy periods Confirm the breach by checking ledgers, correspondence, notices and dates Gather evidence before issuing a breach notice, particularly for abandonment, insolvency or repeated breaches Avoid sending informal warning emails that contradict or confuse the formal breach notice Consider whether a short-term commercial solution is preferable to escalation Do not change the locks until you are certain the termination is valid Decide your commercial objective early: compliance, payment plan, negotiated surrender or termination. 2. When the tenant applies for relief against forfeiture Termination is not always the end of the story. In each state, a terminated tenant can apply to a court or tribunal for relief against forfeiture. The focus is often less on whether the landlord was technically entitled to terminate, and more on whether it would be fair and just to give the tenant another opportunity to continue the lease. Courts and tribunals are often prepared to grant relief where the breach is capable of being remedied, particularly in cases involving rent arrears, if the tenant can promptly pay outstanding amounts, reimburse the landlord’s costs, and provide assurance that future compliance will occur. This is especially common where the tenant has invested significantly in the premises, operates an established business, or termination would cause disproportionate hardship. In response to such proceedings, landlords should be prepared to demonstrate the seriousness of the breach, the tenant’s compliance history (e.g., repeated defaults, broken payment arrangements and ongoing trading failures), and any prejudice reinstatement would cause (e.g. reputational issues, disruption to leasing strategy and tenant mix). Courts and tribunals are generally less sympathetic to tenants where the breach reflects a pattern of ongoing non-compliance. Relief applications must generally be made within six months from the date the landlord recovers possession, so it is important not to re-let the premises too quickly. If an application is filed or reasonably anticipated, the court or tribunal may restrain the landlord from granting a new lease to a third party until the matter is resolved. Premature re-letting can expose landlords to claims from both former and incoming tenants. In some cases, consenting to reinstatement on strict conditions, such as immediate payment of arrears, bank guarantees, or revised lease obligations may be commercially preferable to lengthy litigation. Key actions for landlords Pause any re-letting activity until it is confirmed that no relief against forfeiture application is likely to be filed Gather evidence showing the seriousness, duration and impact of the tenant’s breaches, particularly any repeated defaults Assess whether conditional reinstatement may be commercially preferable to resisting relief Keep detailed records of losses, legal costs and mitigation efforts after termination. 3. When the tenant has a counterclaim A tenant facing termination or enforcement action will often respond with a counterclaim. These can take many forms, but common examples include allegations of failure to repair or maintain common areas, misrepresentation during lease negotiations, incorrect outgoings charges, disruption caused by redevelopment or centre works, inadequate or obstructed access and trading interference. In some cases, tenants may also allege that the landlord has engaged in misleading and deceptive conduct or unconscionable conduct giving rise to a damages claim on the tenant’s part, which may be argued in an attempt to overcome a no set-off clause in the lease. Counterclaims invariably complicate enforcement of the lease. Even where the tenant is clearly in default, a counterclaim will undoubtedly delay proceedings, and potentially reduce or offset outstanding arrears, undermine termination rights and increase legal costs. It is important to distinguish between genuine legal exposure and tactical resistance. Some counterclaims are raised primarily to delay enforcement, create leverage in negotiations, or support an application for relief against forfeiture. Others identify real compliance issues that require immediate attention. Early legal assessment can help determine next steps. The best defence? Preparation. Landlords who maintain clear maintenance records, well-documented outgoings calculations, accurate disclosure statements, and records of all written communication with tenants will be in a stronger position to address counterclaims quickly and effectively. Key actions for landlords Request in writing full particulars of the alleged claim, together with supporting documents from the tenant Avoid making admissions and keep all responses factual and professional Pull maintenance records, repair logs, outgoings reconciliations, disclosure documents, correspondence, meeting notes and other documents relevant to the allegation Check whether leasing staff, centre management or third-party contractors made informal representations or assurances that could be relied upon by the tenant Assess whether the counterclaim is primarily tactical (and commercially negotiable) or presents genuine legal risk requiring a strategic response. Final thoughts When a retail relationship breaks down, landlords often feel pressure to act quickly. However, acting too quickly, or informally, can create far greater problems than the tenant’s breach itself. In these situations, landlords should: Document and keep records of everything Follow the lease terms and statutory process carefully Avoid informal shortcuts Keep communication clear, factual and professional Seek advice early before the situation escalates. A measured, evidence-based approach not only protects the landlord’s legal position, but also strengthens commercial leverage and improves the likelihood of an efficient resolution. This article by Holding Redlich Partner Alana Giles, Senior Associate Georgeana Luong and Lawyer Lachlan Ahale was first published in SCN magazine – CBD Guns edition.