As a landlord, you have just as many rights as your tenant. It is then important to understand these rights to ensure you have a successful relationship with your tenant and to protect your property.
It’s critical that you clearly document every aspect of your dealings, rights and responsibilities including:
- The amount of rent the tenant is required to pay;
- The term of the lease;
- The options for renewal; and
- Who is responsible for repairs and fit-out of the premises.
Your lease will also need to set out how you can deal with disputes and what the process is for either party to terminate the lease.
Your rights include requiring the tenant to pay the outgoings like rates, taxes, levies, water and utilities if you choose. It is important to negotiate these payments and the rent with the tenant before you both sign the lease agreement. Both parties need to understand clearly who is responsible for what and when it is payable. You also have the right to receive rent in a timely fashion. If your tenant does not pay rent on time or by the arrangements negotiated between the parties, then in most states and territories you can sue for rent or lawfully take possession of the premises and terminate the lease. Some procedures need to be followed to make sure you are doing this legally and in compliance with the lease. In this case, it is always important to read your lease agreement and seek legal advice if needed.
If you choose to pass on the obligation of building insurance to the tenant, ensure that you have the right to receive certificates of insurance in the lease agreement to confirm the tenant has adequate cover to protect your property. For example, you may require they have public liability insurance and plate glass insurance for a set amount and hold their policies with a specific insurer.
You also have the right to hold a bank guarantee for a commercial lease as security over the property in the event the tenant goes into default. It can be in a particular form, and you can require that it does not have an expiry date. You can also require that the tenant has a personal guarantor for the lease so that if the tenant cannot pay any amount due, the guarantor is required to meet this obligation.
Structure and Maintenance
Usually, it is the landlord’s responsibility to repair structural aspects of the building. However, maintenance and fit-out are the tenant’s responsibilities. Your lease agreement should explicitly set out what structural change includes and what maintenance and fit-out include, so you both understand who is responsible for what and your rights if you refuse to fix something. It is important that the lease agreement sets this out clearly as the common law is murky in this space.
For example, there are several cases where the lease has implied that a landlord must maintain common areas by undertaking repairs to the building, but this is not written into the agreement. It’s harder to imply an obligation on the landlord to fix premises where the whole area has been leased to a single tenant. The Retail Leases Acts in each state and territory require the landlord to repair and maintain common areas in a shopping centre, but there is no such requirement for commercial leases.
If the lease doesn’t contain any clauses requiring you to make specific repairs, then you don’t have to unless legislation like the Retail Leases Act governs your agreement.
You can require the tenant to make good the premises meaning they have an obligation to return the premises to the condition it was in before they entered into the lease. This needs to be clearly set out in your lease agreement otherwise, it can leave you with huge repair expense in repair once your tenant leaves.
Remember to work with your tenant. It is beneficial for you if their business stays in your premises and does well so they can continue to occupy the space and pay rent. If you have issues with your tenant, discussing these points reasonably and amicably will ensure that your business, being the running of the property, remains successful. If you are unsure about your rights in regards to your lease agreement, get in touch with our commercial leasing lawyers on 1300 544 755.