Don’t ignore that email – the one containing a breach notice! 145

In the day-to-day operation of a motel, formal correspondence from a landlord that is overlooked, or filed to respond to later can have the potential to become a serious problem. Staffing issues, guest demands and ongoing business operational issues frequently take priority. However, failing to properly engage with a breach notice is not a risk that can be deferred or managed later.  Under Queensland’s updated property laws, inaction can quickly place the future of a leasehold business at risk.

Under the Property Law Act 2023 (Qld), which came into effect from August 2025, the statutory process surrounding lease breaches has become more structured and, in many respects, less forgiving. In practical terms, a failure to respond properly to a breach notice, within the prescribed time frame. can result in the loss of renewal rights or termination of a lease far more quickly than many operators expect. 

From breach to termination

A breach of lease arises where a tenant fails to comply with an obligation under the lease. Common examples include rent arrears, failure to carry out required maintenance or failure to maintain insurance in accordance with the lease terms.

Under the new legislation, a landlord cannot terminate a lease without first following a prescribed process. The landlord must issue a formal notice to remedy the breach, commonly referred to as a Form 7. This form has been updated from what has been issued in the past, however the information to be contained is similar, that is, the notice must clearly identify the alleged breach, set out what is required to remedy it (or the compensation required) and provide the tenant with a reasonable period to remedy it.

What is a reasonable period will still depend on all of the circumstances including the nature and the extent of the breach and what the lessee must do (or stop doing). If the breach is not remedied within the timeframe specified in the notice, the landlord may then issue a notice to terminate the lease and or exercise their rights of re-entry. Once that step is taken, the matter moves beyond routine compliance. At that point, the tenant may need to apply to the court for relief against forfeiture in order to preserve the lease and the business conducted from the premises.  There are strict time frames for seeking such an application.

The role of financiers and rights of entry

Most motel leasehold businesses are financed, and the lease itself commonly forms part of the financier’s security package. In that context, a Right of Entry, or tripartite agreement, can play a critical role. A Right of Entry agreement typically requires the landlord to notify the tenant’s financier if a breach notice is issued. The financier is then given an opportunity to step in and remedy the breach before the landlord proceeds to termination. This protects the financier’s security interest and, in many cases, the tenant’s ongoing operation of the business.

Under the new legislation, landlords are required to notify designated third parties, including financiers, when issuing breach notices, whose name and address is known to the landlord. This is an important change and will apply whether or not there is a Right of Entry Agreement.  This section may turn out to be a toothless tiger in practice due to the caveat in the section that the name and the address of the designated person needs to be known to the landlord.  It would be in the interests of financiers in the leasehold motel industry to ensure that such details are provided to the landlord.

Abandonment

One of the key changes in the new legislation is that landlords can now re-enter premises without a breach notice if it is evident the tenant has abandoned the premises. In the past, where a tenant walked out, the landlord would need to go through an arbitrary process of serving a breach notice, liaising with the tenant's bank (if any) and allowing a reasonable time to pass.  

Now, the new legislation simplifies the process and allows a landlord to exercise a right to re-enter the land if the lessor reasonably believes the lessee has given up possession of the land.  There is no need for a breach notice and no need for an application to the court for recovery of possession. Under the new legislation, landlords are required to notify designated third parties, including financiers, when issuing breach notices, whose name and address is known to the landlord. This is an important change and will apply whether or not there is a Right of Entry Agreement.

Other key legislative changes affecting motel leases

The new legislation introduces a number of other provisions that significantly affect commercial and motel leases, including those entered into before the commencement of the legislation. Where a lease permits a tenant to seek the landlord’s consent to as an assignment, sublease or the creation of a mortgage, landlords are no longer entitled to rely on an unfettered discretion. Decisions must now be made reasonably, and this requirement cannot be excluded by the terms of the lease.

The legislation also imposes formal timeframes on the consent process. Once a tenant has provided a proposal notice together with all information required under the lease, the landlord is generally required to issue a decision notice within one month. Where consent is refused, the landlord must now give reasons for that refusal. In addition, where a landlord intends to refuse a tenant’s option to renew due to a breach of the lease, the landlord must first issue a specific notice to the tenant. Following receipt of that notice, the tenant has one month to apply to the court for relief. This represents a significant departure from the previous position, where strict compliance with notice requirements was required and even minor or technical breaches could permanently extinguish renewal rights.

Practical considerations for operators

While the changes introduce clearer procedural fairness, those protections only operate where tenants actively engage with the process. If a breach notice is received, it is important to identify all relevant deadlines, consider whether the alleged breach is valid and whether the notice complies with the statutory requirements, and engage with the landlord at an early stage. Where the lease is financed, the financier should also be notified promptly.

Waiting until a notice to terminate is issued significantly limits the options available and often results in urgent and costly court proceedings.

Final comments

As is always the case proactive compliance and an understanding of lease obligations are essential. Every lease is different and you need to take the time to know what your lease says. In most cases, early advice and early engagement will be far less costly than attempting to resolve matters once termination has occurred.  Please take our comments as general guidance and you should contact us if you need advice on your motel lease. 

Author,
Amy O’Donnell
Mahoney Lawyers & Advisors