Commercial Tenancy Agreement: Keep Your Investment Safe

A well-structured commercial tenancy agreement may ensure your investment property remains safe and secure, while professionally defining your landlord-tenant relationship and detailing liability on both sides.

Commercial leases typically differ from residential leases in that they have special clauses stipulating what activities can be carried out on premises, who's allowed onsite, privacy and landlord access rights, safety and security regulations, as well as business-specific clauses.

Commercial tenancy agreements cover everything from office space to factories. Thorough research should be conducted by both prospective tenants and landlords to ensure business owners have the freedom to run their company their own way, without compromising the landlord's property or infringing on other tenants' leases.

Australian Capital Territory

The Australian Capital Territory Government's 'Leases Commercial and Retails Handbook', available online at the Office of Regulatory Services' website, acts as a guide to landlords and tenants regarding their rights and responsibilities under the Leases (Commercial and Retail) Act 2001. The Act stipulates that both the landlord and tenant are each responsible for their own costs in the preparation of the lease agreement. In the ACT, written acceptance of a commercial lease must follow on from verbal agreement within seven days. The landlord must provide the tenant with a signed copy of the lease agreement within 21 days of stamping at the office of the commissioner for revenue or registering by the registrar-general.

New South Wales

NSW businesses eager to rent commercial space must take out a commercial retail agreement. According to the NSW Department of Fair Trading, both landlords and commercial tenants can avoid or quickly resolve any issues that may arise throughout the tenancy by ensuring both parties know their rights and responsibilities before entering into a tenancy agreement. While verbal agreements regarding commercial properties are valid in NSW, a written agreement makes it much easier for both parties to prove the terms. Landlords, be sure to complete a Lessor's Disclosure Statement. Failing to do so means the tenant can terminate the lease within the first six months by giving notice in writing.

Northern Territory

In the Northern Territory landlords are permitted to use any form of written tenancy agreement provided it complies fully with the region's Act. To be compliant, the commercial agreement must include, as a bare minimum:

  • The standard terms and conditions set out in the Act
  • The name and address of the landlord and tenant (and the agent if there is one)
  • Details of the premises
  • Start and end dates of the tenancy (or just the start date for a periodic tenancy)
  • Details about the amount of rent payable and how rent should be paid; and
  • Any other terms agreed to by the landlord and tenant (these terms must not conflict with the Act)

South Australia

South Australian commercial lease agreements are covered by the Retail and Commercial Leases Act 1995 provided the rent is below $250,000/year. Before either the landlord or tenant commits to a commercial lease both parties should consider:

  • Whether the premises are structurally suitable for the intended business purpose
  • Forecast maintenance costs
  • Current market rents

Prior to entering into a lease agreement the landlord must also provide the prospective tenant with a disclosure statement. This is a written document detailing what the property can be used for, access arrangements, lettable area, the basis of the rent, and a number of other items. These points will also form the basis for your agreement.

Tasmania

As with the other Australian states and territories, commercial leases in Tasmania must be preceded with a disclosure statement. This document must provide comprehensive detail regarding what the premises can be used for, its total lettable area, access to the premises, and what's included in the rent. Your rental agreement should then be structured around the information within the disclosure statement.

Victoria

Consumer Affairs Victoria stipulates that a commercial lease should be drafted by a legal practitioner or a conveyancer. According to the state government body, the landlord should provide the tenant with a copy of the agreement:

  • At the start of negotiations, along with any other prescribed documentation
  • At least seven days prior to the lease being entered in to. This must be the final copy of the agreement and be accompanied by a disclosure statement
  • No more than 28 days after the tenant signed the lease, a copy also signed by the landlord must be returned to them

Western Australia

The Commercial Tenancy Agreements Act 1995 regulates commercial leases in Western Australia. The state's primary focus in both the Act and any lease agreements is transparency and fairness. For landlords drafting a commercial lease agreement, ratchet clauses that fail to take into account current market rent levels are not permitted in Western Australia.

 

General Disclaimer

The information contained in TenancyCheck.com.au website is general information only and does not constitute legal, financial or compliance advice. As the laws relating to tenancy agreements may have changed we recommend you check with the relevant State or Territory government department. We also recommend that you obtain your own independent legal advice about matters relating to landlord obligations, tenant rights and any legal disputes you may have with a tenant(s).