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Lease costs shift to landlords. |
Recent changes to the law make it an offence for landlords to recover lease preparation expenses to which they are not entitled. |
If a landlord contravenes the relevant par ts of the Retail Leases Amendment Act 2004, they will be guilty of an offence and liable to a penalty of up to $11,000. The tenant will also be able to recover, as a debt from the landlord, any payment accepted by the landlord in contravention of the law. |
Prior to the new law, it was an offence for a landlord to accept 'key money' for granting renewal or extension of a retail shop lease, but they could require the tenant to pay a reasonable amount for legal or other expenses associated with preparing entry into, renewing or extending a retail shop lease. |
Accepting key money is still an offence. Now, however, the landlord must pay for lease preparation expenses. |
A lease will be voided to the extent that the tenant has had to pay key money or preparation expenses connected with granting, renewing or extending the lease. |
Preparation expenses include legal costs and associated disbursements like company search fees and photocopying fees; fees for preparing survey plans and mortgage consent fees. |
A small concession |
The landlord may recover lease preparation costs if the tenant asks for amendments to the lease - but not when the amendments are:
- to insert or var y the tenant's particulars, the rent or the term;
- to remedy the landlord's failure to include or omit a term that both parties had agreed on;
- or the amendments are requested before the tenant has given the landlord a disclosure statement or a tenant disclosure update.
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| Where the tenant is liable to pay for amendments to the lease, the landlord must give them a copy of any accounts received for expenses arising from the amendments. |
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No more six-monthly Statements |
A second important change removes the requirement that the landlord should make available to a tenant every six months a document detailing all landlord expenditure on outgoings to which the tenant contributes. |
The statement will still have to be given before a lease is entered into, but thereafter only once a year. |
peter.mcnamara@cml.com.au
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