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Defaulting Tenants - practical steps to take when reminders go unanswered

By Andrea White - 16 Oct 2023

In the current climate we are seeing more of our landlord clients seeking advice on their options for dealing with defaulting tenants.  In the article below, Andrea White (a Senior Associate in our Property Team) and Parsha Grant (Senior Solicitor in our Litigation Team) discuss your best course of action when your usual reminder emails and phone calls have gone unanswered.

My defaulting tenant is ignoring all contact, what should I do?

As a first step, we usually suggest a letter of demand - which just as it implies, is a letter to the tenant demanding performance of their obligations within a specified timeframe.  We often find the issuing of a demand letter from a solicitor is enough to prompt payment (or to cease other types of default), or at the very least will open the lines of communication where a payment plan, or other alternatives may be agreed.

If personal guarantees have been provided under your lease, demand should also be made on the individuals at this time.

Is your Tenant a Company?

If your tenant is a Company and has failed to pay rent or other monies due following a letter of demand (or if you simply wish to take a stern approach from the outset) a statutory demand can be served on the tenant (provided the debt is undisputed and the debt due is not less than $1,000.00).  Once issued, the Company will have 10 working days from the date of service of the demand to dispute the demand, or 15 working days to pay the debt or enter into compromise under Part 14 of the Companies Act 1993 (or otherwise compound with the creditor), or give a charge over its property to secure payment of the debt, to the reasonable satisfaction of the creditor.

If the debt remains unpaid after 15 working days and if no application to set aside is made, you will have 30 working days from the expiry of the 15 working day period to apply to the High Court to wind up the company.  Again, we often find that a threat to put a company into liquidation is enough to prompt payment from tenants, but where it isn't our litigation team can assist with issuing liquidation proceedings and/or issuing proceedings against any personal guarantors depending on the likelihood of recovery from each entity.

Just want your tenant gone?

All leases in New Zealand are governed by the Property Law Act 2007 which requires landlords to provide a tenant with notice of a breach and, in the case of overdue rent/monies provide them with 10 working days to pay the arrears, or in the event of some other type of breach provide a reasonable time to remedy it or pay a reasonable compensation instead.

In short, once a lease has been granted, the law does not allow you to cancel it for a tenant default without first providing the tenant with adequate time to remedy the breach.  If the breach is remedied in time, the landlord can no longer cancel under that notice and for any subsequent breach the process must be started again.

If your tenant does not remedy a breach as properly required under the notice, you will be able to take back possession at the end of the period specified in the notice (provided you can do so peaceably). If the tenant does not vacate at that time, we would then apply to the court for a possession order.

Summary judgment proceedings would be issued to obtain judgment and an order of possession. If you are successful and we receive a summary judgment decision in your favour, then we can make an application for a writ of possession. Once a writ of possession is obtained, then a bailiff/sheriff may enter the land and hand back possession to the owner.

Other options

If you have a bank guarantee in place, you can easily draw down on this to remedy a monetary default.  Once the drawdown has been completed you can require the tenant to provide a "top up" of the guarantee so that it complies with the amount required to be provided under the Lease.

If your current tenant has taken an assignment of the Lease, you may also (or alternatively) be able to pursue the previous tenant (whether this is possible will depend on the terms of the lease/assignment).


As you will see from the above there are several options you can consider when dealing with defaulting tenants.  Your best course of action and recovery will vary from tenant to tenant and will be dependent on the terms of your lease.  The Property Team at Martelli McKegg has significant leasing experience which is backed by our experienced Litigation Team when the need arises.  If you need assistance or advice regarding tenant default under your commercial lease (whether you are a landlord or tenant), contact our team today:

Andrea White

Parsha Grant

Vanessa Dew

Tony Johnson


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