Once a commercial enterprise is involved, the complexities of leasing are magnified. Solicitors, Strata Managers and Landlord’s need to approach the deal with care.

We have just represented a person who found what they thought to be their perfect tenant. It turned to disaster because the lease didn’t consider the requirements of the Strata Schemes Management Act 2015.

Before leasing a property, a Landlord or their representative should consider the following list:

  1. Are the premises zoned to permit the enterprise?
  2. Is there a bylaw preventing the enterprise?
  3. Will the fit out require strata approval, for example, will there be a need for a development approval that the strata will have to execute?
  4. Will the fit out require a common property bylaw, which will require 75% support from the other lot owner’s?
  5. What impact will the enterprise have on insurance?

If the fit out requires a common property bylaw, the Landlord will be faced with maintenance and repair obligations. Further, if insurance premiums are increased, the Landlord will be responsible for the increase. 

Solicitors and Agents should ensure that the building works are prepared and considered prior to entering into a Lease. The lease may need amendment to protect the landlord against unexpected maintenance costs and insurance payments. 

Finally, speak to other lot owners to see if they will agree. If you need a special resolution to fit out your tenant, the numbers may be impossible to raise.

We all need tenants if we are Landlords. Nonetheless, getting a tenant that costs us only affects our return on investment.