Private Real Estate


Leasing Commercial Property in Victoria
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The following information has been prepared in compliance with the provisions and rules outlined in the Retail Leases Act 2003 (Vic) and Retail Tenancies Reform Act 1998 (Vic). Under the Acts, the word retail is defined broadly to include premises such as shops, professional offices and cafes.
1.	The following steps are designed to be a guide to landlords (lessors) who are seeking to lease their property to a tenant for commercial purposes:
	(a)	Before considering whether to advertise your property as being available for commercial rent, it is important to do some of your own research and see if there is a demand for commercial property in your area. Ideally your property will be located in a busy commercial area like a mall, traffic junctions, shopping centre or the CBD where there are a number of shops and businesses trading.
	(b)	The landlord will then advertise the property and take any potential tenants for an inspection of the premises.
	(c)	If the tenants are still seriously interested in leasing the property, both parties should enter into negotiations about the property. You must provide the prospective tenant with a copy of the information brochure published by the Small Business Commissioner. This brochure can be obtained over the internet.
	(d)	You should then prepare a disclosure statement. The disclosure statement specifies information such as the tenancy details, rent details, any charges payable by the tenant in connection with the lease and a draft copy of the proposed lease. A standard disclosure statement form can be obtained from the Retail Leases Regulations 2003 (Vic) or the NSW Law Society. This statement must be provided at least 7 days before a lease for retail premises are signed.
	(e)	If the lease is mortgaged, you may be required to seek the consent of the mortgagee (lender bank) before agreeing to the lease. Most banks will be happy to oblige unless there is a compelling reason not to.
	(f)	You will be required to keep up basic insurance coverage for fire and the usual risks to your property.
	(g)	It is also a good idea and extremely common for landlords to require the prospective tenant to provide either a personal guarantee, bank guarantee or security deposit for the lease. This provides you with security in case the lease is breached and is particularly useful when it is a corporation, trust or business which is seeking to rent the property. A guarantee is usually a maximum of 3 months rent.
	(h)	It is then advisable that you contact your solicitor to produce a final lease document, as the lease will govern your relationship with the tenant for the term of the lease. This final document should reflect all the terms that the parties have agreed to and reflect everything that is mentioned in the disclosure statement. This is a very important legal document, so it is vital that everything you desire is included.
		Standard lease forms do exist and can be accessed by your solicitor. At the least a commercial lease should outline what rent is payable, whose obligations it is to pay outgoing expenses, whether the tenant can undertake renovations, who is liable for damage to the property, and provide an option as to whether the lease can be extended.
		Remember you could be pursued for unconscionable conduct and have the contract set aside if you include things in the lease that were not agreed to or unfairly take advantage of the weaker position of a tenant who does not speak English or suffers from other impediments.
	(i)	The tenant can move into the property and begin the commercial lease.
	(j)	Once the lease is signed a copy must be provided to the tenant within 28 days. The Small Business Commissioner must also be notified within 14 days of the retail lease being signed. This can be done electronically by submitting a form on the Small Business Commissioner's website.
	(k)	You should then organise through your solicitor to have the lease registered on your certificate of title. You could be liable for fraud if you allow another purchaser to buy your property without notice that it is encumbered with a commercial lease.
2.	Renting Commercial Property in Victoria
	The following information has been prepared in compliance with the provisions and rules outlined in the Retail Leases Act 2003 (Vic) and Retail Tenancies Reform Act 1998 (Vic). Under the Acts, the word retail is defined broadly to include premises such as shops, professional offices and cafes.
	The following steps are designed to be a guide to tenants who are seeking to lease a landlord's property for commercial purposes:
	(a)	It is very important before leasing a property for commercial purposes to do some of your own research. In particular it is important to know about the success of previous commercial tenants and how popular the area is in general. Ideally the property will be located in a busy commercial area like a mall, traffic junctions, shopping centre or the CBD where there are a number of shops and businesses trading. However, even then it is important to be aware of competitors and other related concerns.
	(b)	After finding a property that is attractive, it is important to contact the landlord and organise for an inspection of the property.
	(c)	If satisfied with the property the landlord should provide you with a discloser statement at least 7 days before you sign the lease. A disclosure statement specifies information such as the tenancy details, rent details, any charges payable by the tenant in connection with the lease and a draft copy of the proposed lease. A standard disclosure statement form can be obtained from the Retail Leases Regulations 2003 (Vic) or the NSW Law Society. You should raise with the landlord any matter or term in the lease you are not satisfied with.
	(d)	The landlord will most probably require you to provide a personal guarantee, bank guarantee or security deposit before entering into a lease. This provides the landlord with security in case the lease is breached and is often required particularly when it is a corporation, trust or business which is seeking to rent the property. A guarantee is usually a maximum of 3 months rent.
	(e)	You should also contact the local council to ensure that the area is zoned for commercial purposes and it is permissible for you to use the property for certain commercial purposes. Moreover, if you are seeking to make improvements and renovations to the property you may also be required to obtain a construction certificate, which can be obtained by application from the council. Be aware that approval is not always easy to obtain.
	(f)	If necessary for certain businesses like a butchery, restaurant or hotel you may also be required to obtain special licenses or certificates from the relevant statutory authorities. Again these are not always easy to obtain, so plan ahead.
	(g)	It is also advised that you obtain public liability insurance to cover customers who may be injured on your property and insurance on your fixtures, fittings and equipment. You will also be required to take out a workers compensation policy.
	(h)	You should then be provided with a formal lease document. As the lease will govern your relationship with the landlord for the term of the lease and your obligations under the lease, it should reflect all the terms that the parties have agreed to and reflect everything that is mentioned in the disclosure statement. This is a very important legal document, so it is vital that everything you desire is included.
		At the least a commercial lease should outline what rent is payable, whose obligations it is to pay outgoing expenses, whether the tenant can undertake renovations, who is liable for damage to the property, and provide an option as to whether the lease can be extended.
		If you have any questions regarding the lease or want something changed, you should contact the landlord immediately. If you are not happy with their response you can contact a solicitor to represent your interests.
		Remember you can not be forced to sign anything that you are not happy with and the other side is obligated to not act in an unconscionable manner.
	(i)	Subject to the lease, you should then be able to move in and occupy the premises and begin trading forthwith.
	(j)	The landlord is legally obligated to provide you with a signed copy of the lease within 28 days of when it was signed. The landlord must also notify the Small Business Commissioner within 14 days of the commercial lease being signed.
	(k)	Before filing the lease make sure you are familiar with all its terms and your obligation under it.



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