Commercial Leasing for Tenants
From a Tenant’s Perspective
Leasing in the ACT is governed by the Leasing (Commercial and Retail) Act 2001.
The terms of a lease are normally negotiated between a tenant and landlord and once negotiations are confirmed, the landlord is required to issue a Disclosure Statement fourteen (14) days prior to the lease being approved and signed by the tenant.
However, a landlord is also required to provide a tenant with a “copy” of a proposed lease so that a tenant can make an informed decision on the terms and conditions of the lease, prior to signing the Disclosure Statement and advise you of where you can obtain a copy of the relevant Handbook.
It is usual for a landlord to charge a tenant legal costs associated with the preparation of a lease, should a tenant withdraw from the lease, after signing the Disclosure Statement.
It is always wise to seek legal advice when you have received the Disclosure Statement for review and signing.
The Disclosure Statement form is prescribed under the Act and any significant agreements or representations by you or the landlord should be noted in the last section of the Statement.
The landlord usually signs both copies of the Statement and you are required to return one copy to the landlord – signed and dated by both parties. Once received by the landlord, the landlord will arrange for issue of the final lease documents to be forwarded to you for final approval and signing.
As with the Disclosure Statement, it is wise to seek legal advice prior to signing the Lease documents to ensure that your rights are protected and that the terms of the lease are not harsh and unconscionable.
A landlord and tenant are responsible for their own legal costs and the tenant is responsible for the registration fees, should the tenant require registration of the lease.
The permitted use clause of a lease is very important as it determines the type of business that will be operated within the leased premises. To check on the permitted use, you can search the premises’ Crown Lease or Units Plan. A breach of the permitted use in the Crown Lease also constitutes a breach of the Lease.
When times are tough and the tenant may not be trading well, the rent and other financial obligations will still need to be paid. In fact, these payments will still need to be made even if the business ceases trading altogether. It is also important to realise that, unless there is an option to renew in the lease, there is no guarantee that the tenant will be able to continue to occupy the premises beyond the specified term of the lease without the landlord’s consent and agreement.