Retail leases, urgent repairs and landlords – what are your rights?
If you are a small business and considering (or already have) a retail lease, it pays to know your rights.
First, check if yourself or the landlord is responsible for the cost of replacement or repair:
Under a retail lease, the landlord is responsible for maintaining the following in the same condition as the premises were when the lease was entered into:
- The structure of the premises – ie. the walls and the roof;
- The fixtures in the premises belonging to the landlord, such as shelving;
- Plant and equipment at the premises such as the air conditioning;
- The appliances, fittings and fixtures that the landlord has provided under the gas, electricity, water and drainage (including the power-boards, plumbing and hot water system).
However – as the tenant you will be responsible for the above if the need to repair the item is caused by your misuse of the item, or you are required to remove that item at the end of the lease.
You are responsible for keeping the premises clean and in good repair subject to fair wear and tear over the term of the lease. This includes the cleaning and servicing of any plant or equipment; and proper garbage disposal.
The landlord is responsible for all costs associated with compliance with essential safety measures required at the premises (such as emergency exit signage, lighting, fire-fighting equipment, fire and emergency exit doors, smoke alarms, paths of travel to exit, fire sprinklers) and cannot seek compensation from you. We see landlords trying to pass on these costs all the time.
It is often necessary to seek legal advice before signing a retail lease, and clearly define responsibility for particular items…
Before you even enter the lease, have a full inspection report of premises done and signed by yourself and the landlord, to establish the condition of premises prior to your entry as tenant.
Include in the lease clear obligations for each party, and a well-defined and specific standard of repair and maintenance so there can be no disagreements about whether something needs repairs or not – especially in the case where you believe an urgent repair needs to be done.
Items such as air-conditioning, cool-rooms, heating fixtures, decorative features, carpeting, ceilings, and wall partitioning should be carefully defined as to whose responsibility it is to repair or replace. These are things that will be used by your business in day-to-day functioning and it is worthwhile to ascertain responsibility and avoid any costly disputes later on.
I have established that the item is in need of repair or replacement, and it is the landlord’s responsibility under my retail lease – what can I do if I need it urgently repaired?
You are able to undertake urgent repairs and then seek reimbursement from your landlord when the repairs are necessary to fix a fault or damage that has or causes a substantial effect on or to your business at the premises. You must first however take all reasonable steps to make contact with the landlord or the landlords agent before carrying out repairs – by writing and other forms of contact available to you.
Your rights if the premises have been severely damaged or destroyed (not by you!):
The landlord and tenant may agree to terminate lease if premises are damaged or destroyed.
If the premises has been damaged but you can use it in a reduced capacity, your rent, outgoings or other charges may be reduced for the period of time in which you are functioning at that reduced capacity;
If the extent of the damage is severe and the landlord considers repair impracticable the landlord may notify you of that and either of you may terminate the lease by giving at least seven days written notice of termination to the other party;
If the landlord fails to repair the damage within a reasonable time after you have asked the landlord in writing to do so, you may terminate the lease by giving at least seven days written notice to the landlord.
If you are seeking further clarity or would like to ensure your retail lease agreement is going to protect your business’ interests, speak to us at Sinclair + May. Disputes regarding retail leases can cost your business and are easily avoided with the right legal advice on your side!
This is general advice only. Liability limited by a scheme approved under Professional Standards Legislation.
Published Aug 13, 2018
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