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ARTICLE · 20 NOVEMBER 2014

Challenging an option under a lease in New South Wales

Timeliness is everything, when a landlord wants to challenge a tenant from taking up an option to renew a lease in NSW.

AustraliaReal Estate and Construction

Landlords should not rest on their laurels, and think that having a clause in a lease making the exercise of an option to renew a lease, conditional on performance of the Lease by the Tenant, is in itself sufficient protection should the Landlord want to challenge a Tenant taking up its option. The Landlord needs to do more, and in a very timely fashion.

In situations where the breach of the lease occurred before the Tenant gave notice the Landlord has to also give a prescribed notice to the Tenant that complies with section 133E of the Conveyancing Act 1919, and do so within 14 days of the Tenant giving notice.

The Tenant then has one month from receiving the prescribed notice from the Landlord in which to seek from the Supreme Court an order for relief against the operation of the clause in the lease that makes the effectiveness of the option conditional on performance of the Lease. Where that application is not made by the Tenant in time, or the resulting Court

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