Lease information

A lease is an important document which impacts the parties in a number of ways. It is also a legally binding document which holds the parties to its terms and conditions. Prospective tenants should ensure they understand all provisions of the lease they are about to enter and should obtain advice from an experienced solicitors before signing any documentation.

COMMERCIAL LEASES

Entering into a lease
A lease is entered into or assigned when the tenant enters into possession of the premises with the consent of the landlord or starts paying rent or the lease or assignment is signed by all parties.

Disclosure
The importance of knowing facts up-front. Before a lease is entered into or renewed, the landlords must provide a disclosure statement to the prospective tenants.

A disclosure statement details important aspects of the lease, such as rent, outgoings and other obligations. Prospective tenants should ensure they carefully examine the details of the disclosure statement; its contents can have a significant impact on the lease and the viability of the business.

Where the landlord fails to provide a disclosure statement the tenant may:
Withhold rent, and is not liable to pay rent until a disclosure statement is given

• Tenants may only exercise the right to withhold rent after giving the landlord written notice to say that they have not received the disclosure statement.
• This must be done no earlier than 7 days and no later than 90 days after the lease commenced.
• Tenants who have given such a notice may exercise the right to terminate the lease if they give the landlord written notice within 7 days after receiving the disclosure statement.

Terminate the lease

• The tenant may also terminate where a completed copy of the lease was not given or the disclosure statement contains information that is misleading, false or materially incomplete.

Before signing a lease
A lease deals with many matters. A prospective tenant should ensure that its main features are acceptable.

These include:

• The term of the lease and options to renew
• Rent and the basis of rental reviews
• Outgoings or shared operating expenses
• Obligations to repair/maintenance issues
• The disclosure statement
• Permitted Use
• Assignment

Throughout the life of the lease

Tenants and Landlords cannot act unconscionably in their dealings with one another. The Office of the Small Business Commissioner will promote informed decision-making, and undertake investigations and mediation for disputes between landlords and tenants.

RESIDENTIAL LEASES

Each of the States has passed a Residential Tenancies Act. (Please click on the following link to view the Victorian Residential Tenancies Act).

The residential tenancies Acts apply to most residential tenancy agreements although some agreements (such as where the tenant is purchasing the dwelling) are specifically excluded from the operation of the Acts.

In addition, the Acts do not apply to certain premises, even if they are the subject of a residential tenancy agreement, such as hotels, or premises ordinarily used for holiday letting.

In some states the legislation extends to boarding houses and mobile homes.

It is important to consult a solicitor before signing a Residential Tenancy Agreement as this agreement deals with the following aspects:

• Rights and obligations of landlord and tenant
• Payment and liability for rent
• Rent increases and complaints about rent
• Security payments administration (bond administration)
• Procedures for the termination of residential tenancy agreement and recovery of possession of residential premises.

It is imperative to consult a solicitor prior to signing a tenancy agreement because parties cannot contract out of these provisions.

RETAIL LEASES

The Retail Leases Act 2003 does not apply to all premises or businesses. Retail
leases legislation applies to premises that are used wholly or predominantly for
the sale or hire of goods by retail or the retail provision of services, and where the
occupancy cost is less than $1 million per year (the occupancy cost of retail
premises is the combined cost of rent and outgoings).

Retail leases legislation does not apply:

• To tenants in the business of wholesaling, manufacturing or storage,
• Tenants that are listed corporations or subsidiaries of listed corporations,
• Leases for a term of less than one year unless consecutively renewed,
• Premises or businesses as determined by the Minister for Small Business.

Tenancies that are let to businesses that are primarily involved in the retail supply
of goods and services are covered by the Retail Leases Act 2003. These include
premises such as the shops and premises for consumer, business and trade
services or hire of goods.

Please insert the following links under `Useful Links' in this section:

Small Business Commissioner www.sbc.vic. ov.au
Information Brochure for Retail Leases www.sbc.vic.gov.au/retail-leasing-matters/information-brochure