In short
A commercial landlord cannot simply change the locks and terminate a lease the moment a dispute arises. For any non-rent default, the landlord must serve a formal statutory notice under section 129 of the Conveyancing Act 1919 (NSW) giving the tenant a reasonable opportunity to remedy the breach.
An unlawful lockout exposes a landlord to substantial damages for trespass, conversion, and business interruption loss. Conversely, tenants facing forfeiture can urgently apply to the Supreme Court of NSW or NCAT for relief against forfeiture to reinstate the lease and regain possession.
What constitutes a lease default under NSW commercial property law?
A commercial lease default occurs when a party breaches an express or implied covenant in the lease agreement. In practice, breaches are categorized into two primary groups:
- Monetary defaults: Failure to pay rent, outgoings, GST, promotional levies, or maintain a required bank guarantee;
- Non-monetary defaults: Unauthorised assignment or subletting, failure to repair and maintain premises, operating outside permitted use covenants, unauthorised alterations, or breach of statutory licensing requirements.
Leases generally designate core obligations (particularly punctual payment of rent and maintaining insurance) as essential terms. A breach of an essential term or a repudiation of the lease gives the innocent party a contractual right to terminate and claim loss-of-bargain damages, provided statutory notice preconditions are strictly satisfied.
When must a landlord serve a section 129 notice?
Under section 129(1) of the Conveyancing Act 1919 (NSW), a right of re-entry or forfeiture under any provision in a lease is not enforceable by action or otherwise unless the lessor serves on the lessee a compliant statutory notice.
To be legally valid, a section 129 notice must:
- Specify the particular breach complained of with sufficient precision that the tenant knows exactly what must be fixed;
- Require the tenant to remedy the breach, if the breach is capable of remedy; and
- Require the tenant to pay monetary compensation for the breach, if the lessor claims compensation.
The landlord must allow the tenant a reasonable time to remedy the default after service. What constitutes a reasonable time depends on the nature of the breach (for instance, 14 days might be reasonable for providing insurance certificates, whereas structural repairs may require several weeks). Any re-entry attempted without serving a compliant section 129 notice is unlawful and void.
How do rent defaults differ from non-rent defaults?
Section 129(8) of the Conveyancing Act 1919 expressly states that section 129 does not affect the law relating to re-entry or forfeiture in case of non-payment of rent. Therefore, a section 129 notice is not required before re-entering premises solely for rent arrears.
However, the landlord must still comply strictly with the re-entry provisions set out in the lease contract itself. Standard commercial leases typically stipulate that rent must remain unpaid for a specified grace period (commonly 14 or 21 days) and that a formal demand or notice of default must be served before the landlord can exercise rights of re-entry.
Furthermore, if the lease is governed by the Retail Leases Act 1994 (NSW), the parties must engage with dispute resolution processes through the NSW Small Business Commissioner before taking precipitous termination action.
What is the lawful procedure for re-entry and changing locks?
When grounds for forfeiture are legally established and all notice periods have expired without remedy, a landlord may re-enter the premises in one of two ways:
- Peaceable physical re-entry (lockout): The landlord or their authorized agent enters the premises outside trading hours when the premises are unoccupied, changes the locks, and posts a formal notice of re-entry and lease termination on the door; or
- Court proceedings for possession: The landlord files a Statement of Claim in the Supreme Court or District Court seeking a writ of possession executed by the NSW Sheriff.
Physical re-entry must be strictly peaceable. If there is any resistance, threats, or risk of violence, the landlord must withdraw immediately and obtain a court order. Landlords cannot use physical force against persons on the premises.
What happens to the tenant's equipment, stock, and fitout?
A landlord who changes the locks does not acquire ownership of the tenant's goods, stock-in-trade, or equipment. The landlord becomes a bailee of the tenant's property and owes a legal duty of care to protect those assets.
The landlord must:
- Conduct a comprehensive written and photographic inventory of all items left on the premises upon re-entry;
- Provide the tenant with reasonable supervised access to retrieve their personal property and unattached trade fixtures;
- Avoid seizing, disposing of, or selling tenant property without an express court order, statutory authority, or signed surrender agreement.
Selling or destroying tenant goods without lawful authorization exposes the landlord to direct claims for conversion and substantial damages.
What are the risks of an unlawful lockout for landlords?
If a landlord re-enters premises without a valid legal basis, without giving proper notice, or before the remedy period expires, the lockout is wrongful. The consequences for the landlord can be severe:
- Damages for trespass and breach of quiet enjoyment: The tenant can sue for all financial loss resulting from the business closure, including lost profits, supplier penalties, and staff disruption;
- Urgent injunctions: The tenant can obtain an emergency court order compelling the landlord to hand back keys and restore possession;
- Loss of damages claims: A landlord who terminates wrongfully may lose the right to claim future rent and loss of bargain against the tenant and guarantors.
How can a tenant obtain relief against forfeiture in NSW?
The Supreme Court of NSW (Equity Division) and the NSW Civil and Administrative Tribunal (NCAT, for retail leases) possess inherent equitable and statutory jurisdiction to grant relief against forfeiture.
The court views the landlord's right of re-entry primarily as security for the payment of rent and performance of covenants. As a general rule, where a lease is forfeited for non-payment of rent, the court will grant relief and reinstate the lease if the tenant:
- Pays all outstanding rent arrears and interest in full;
- Reimburses the landlord for reasonable legal costs incurred in connection with the re-entry; and
- Provides adequate assurances or evidence of financial capacity to meet future lease obligations.
For non-rent breaches, the court evaluates whether the tenant has remedied the default or is willing and able to remedy it promptly. Tenants must apply for relief against forfeiture immediately upon being locked out, before the landlord grants a new lease to a third party.
What immediate steps should you take?
Whether you are a landlord protecting commercial asset value or a tenant facing eviction, fast and disciplined legal action is critical:
- Landlords: Review the lease terms, audit default notices for statutory compliance under section 129, calculate arrears accurately, and avoid premature lockouts that compromise your legal rights.
- Tenants: Do not ignore default letters. Respond within the specified cure period, seek urgent legal advice from our tenant leasing solicitors, and explore negotiated cure plans or urgent court relief.
Our leasing litigation practice covers landlord representation, commercial dispute resolution, and landlord and tenant litigation across NSW.
Facing a commercial lease dispute or lockout?
Biz Lawyers & Advisory advises commercial landlords and corporate tenants on default notices, section 129 compliance, lawful re-entry, and emergency relief against forfeiture.
Contact Biz Lawyers & Advisory or call 1800 893 836 for immediate commercial leasing counsel.
This article provides general information only. It is not legal advice. Commercial and retail leasing disputes involve strict procedural rules, statutory notice requirements, and time-critical remedies.
Primary sources
Law and guidance checked 27 August 2026.
