Business Lease Disputes

Owning a commercial property means that you have the intention of getting tenants to rent out or lease a unit or two within the building. These types of business deals have laws that protect both the landlord and tenant, but disputes are always a possibility if any one of the involved parties don’t understand the terms and conditions of the contract.

Laws in Queensland

The Property Law Act 1974 (Qld) (the PLA) or the Retail Shop Leases Act 1994 (Qld) (the RSL Act) regulates businesses that offer leases to tenants. Both of these acts state and give power and obligations to the lessor (landlord) and lessee (tenant).

Disputes almost always occur when parties are unsure of what their rights and obligations are. These acts were put in place to protect both the lessor and lessee.

Obligations of a Tenant

As a tenant your obligations are already stated within the lease contract itself. Other than this, the PLA or Property Law Act also requires you to  do the following:

  • Pay rent – you are obviously obligated to pay rent but there are instances where you won’t have to. For example, in the case of natural disasters occuring, the landlord may not collect the rent (or at least ask only a portion of it) until the premises are safe and back to its original condition or state.
  • Keep in repair – as a tenant, it is your responsibility to make sure that the property is in good condition, maintaining it as if it was your first day of moving in.
  • Notice of ejectment – Upon receiving a Court document such as writ of recovery or delivery of land, it is the tenant’s obligation to provide the document to the landlord. Whether or not they have received the document yet, it is the lessee’s responsibility to inform the landlord of its existence.

 

Breaching any of these obligations, plus the ones stated in the lease document itself, may result in a Notice to Remedy Breach of Covenant. There is a possibility that the tenancy will be terminated.

Keeping the property in good condition is well within the tenant’s responsibility and obligation but if they receive a notice from the landlord asking for repairs to be done, and such repairs are decorative, the lessee may apply to the Court to have their repair obligations under this notice be waived, the only exception being if there is a clause within the lease document clearly stating that the property be in a decorative state of repair.

Obligations under the Retail Shop Leases Act

Retail shop owners and landlords are protected and follow the regulations set by the RSL o Retail Shop Leases Act. These are obligations imposed by the act:

  • Disclosure Obligations – both parties must give each other disclosure statements seven days before entering into a lease.
  • Limitations on payments – the tenant should only pay the following to the landlord: rent, the landlord’s outgoings (including maintenance and repairs), damages for breach, indemnity for loss suffered, interest on arrears, and reasonable legal expenses.
  • Sinking fund – sinking funds are accounts that are specifically created for maintenance and repair. The landlord must only keep one sinking fund that is interest- bearing. A sinking fund is required if the landlord asks for maintenance fees monthly.
  • marketing – if part of the fees include marketing, which includes promotions and advertising, it is the landlord’s responsibility to give a detailed plan of how this will be carried out.
  • Payment of compensation – the landlord may end up paying the tenant, but only under these circumstances:
    • Causing a disturbance to the tenant’s business
    • Taking action that restricts access of customers to the shop
    • Causing considerable disruption to the tenant’s trading
    • Failure to rectify breakdown in plant or machinery that is under the landlord’s care
    • Failing to maintain the premises’s cleanliness and overall look
    • Making false or misleading statements upon entering into a lease agreement.

Disputes and Dispute Resolutions

Upon entering into a lease agreement, it usually stated how disputes shall be resolved if it ever arises. A commercial lease dispute lawyer is a professional that specialises in commercial lease disputes and can help you with the process of filing a case ( if need be) or talking on your behalf during negotiations.

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