What is a “Remedies/Effect of an Event of Default” clause? – Landlord/Tenant Agreement..
The Remedies section outlines the various remedies available to either party in the case of a default under the lease. The tenant may be entitled to some remedies but this section often favours the landlord. The primary benefit of a landlord of not terminating a lease is that preservation allows the landlord to sue the tenant for rental arrears and avoid the duty to mitigate its losses. Below are some examples of possible remedies a landlord may have in the event of a breach or default under the lease: Security interest in business: If the tenant is a corporate tenant, the landlord may take a security interest in all of their present and after-acquired property, they may also hold their business licences, and necessary documentation to operate in trust. In the case of default, the landlord may realize on this security interest and take control of the business. Eviction: The landlord may evict the tenant in case of material breach of the agreement or default. This may or may not be accompanied by a right of re-entry. Distress Remedy/Right of Landlord Re-Entry: The landlord may reserve the right to change the locks and retake possession of the leased premises. In such a case, they may also reserve the right to take possession of all property of the tenant remaining in the leased premises in order to satisfy whatever debt was caused by the breach or default. Costs of Re-Entry: In the case that the landlord is required to re-enter to exercise their rights in the case of the tenant's default. This provision may require the tenant to be liable for paying all applicable costs incurred by the landlord in exercising such right. Access to Security Deposit: The landlord may insert a clause whereby they may use the tenant's security deposit to remedy any debt incurred by reason of a default or breach. They will likely also include a time period during which the tenant must replenish the security deposit. Please note that the landlord's remedies may be tempered by a duty to mitigate losses. That is, a landlord must make reasonable efforts to bring in a new tenant to cover the remaining term of the lease.
Blogs related to this clause:
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