Commercial Leasing for Landlords
From a Landlord’s Perspective
Leasing in the ACT is governed by the Leasing (Commercial and Retail) Act 2001 (the “Act”).
It is usual for a landlord and tenant to enter into negotiations concerning the lease of premises – whether commercial or retail. On some occasions, it will be a commercial agent who does this negotiating for you.
Once negotiations are finalised between a landlord and tenant, the landlord is required to:
- provide the tenant with a Disclosure Statement setting out the agreed terms;
- advice as to where a tenant may obtain a copy of the ACT’s handbook, which may be purchased at any ACT Government Shopfront; and
- a copy of a draft lease setting out the terms and conditions of the lease so that the tenant may make an “informed” decision before proceeding with the lease.
Under the Act, the Disclosure Statement is required to be provided to a tenant 14 days prior to the issue of a lease. This, of course, may be waived by a tenant by arranging for his or her solicitor to sign a s.30 certificate.
The Act stipulates that a lease term is usually for a term of five (5) years. However, should the landlord and tenant agree to a reduced term, this may be waived by a tenant by arranging for his or her solicitor to sign a s.104 certificate.
A lease may incorporate obligations upon a tenant, for example:
- permitted use
- rent and annual rent reviews
- personal guarantees if the tenant is a “corporate entity”
- security by way of a bond or bank guarantee in favour of the landlord
- maintenance of an air-conditioning systems
- make good of the premises upon expiry or termination of the lease
- payment of outgoings
It is important to seek legal advice in the preparation of a lease. Under the Act, if a lease is found to be harsh or unconscionable, the Court can terminate the lease upon application by the tenant.
Uncertainty in a lease may cause additional expenditure to a landlord or tenant and is always a potential source for dispute between the parties.