Incentivising tenants to stay the term – will clawbacks be enforceable?

Christensen, Sharon A. (2014) Incentivising tenants to stay the term – will clawbacks be enforceable? Australian Property Law Bulletin, 29(10), pp. 177-179.

Abstract

Incentives are commonly offered by commercial landlords to tenants in the form of short term rent deductions or contributions to the tenant’s fitout. Usually these incentives are conditional upon the lessee remaining in the premises for the term of the lease with an obligation on the tenant to repay a proportion of the fitout contribution and rent deductions upon early termination or assignment. While the enforceability of clawback provisions has always been unclear, there was commercial benefit to landlords in maintaining high rentals on the face of the lease and attracting good quality tenants through fitout contributions. The use of clawback provisions as part of these incentives was recently analysed by the Queensland Supreme Court through the lens of the penalties doctrine in GWC Property Group Pty Ltd v Higginson & Ors [2014] QSC 264, with a negative outcome for the landlord. Unless the decision is overturned on appeal, the salient message for landlords is that repayment of incentives for any reason, not just a breach of the lease, is unlikely to be enforceable.

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ID Code: 80222
Item Type: Journal Article
Refereed: Yes
Additional URLs:
Keywords: Leases, rent incentives
Subjects: Australian and New Zealand Standard Research Classification > LAW AND LEGAL STUDIES (180000) > LAW (180100) > Commercial and Contract Law (180105)
Australian and New Zealand Standard Research Classification > LAW AND LEGAL STUDIES (180000) > LAW (180100) > Property Law (excl. Intellectual Property Law) (180124)
Divisions: Current > Research Centres > Commercial & Property Law Research Centre
Current > QUT Faculties and Divisions > Faculty of Law
Current > Schools > School of Law
Copyright Owner: Copyright 2014 Lexis Nexis Australia
Deposited On: 21 Jan 2015 00:58
Last Modified: 24 Jan 2015 06:26

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