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Landlord obligations – don’t ignore them!

Gene Schirripa

15 Mar 2019

Topics

  • Business Law

Naturally, sometimes things will go wrong in rented properties. When they do, it’s important that landlords are aware of their maintenance obligations. In this article, Gene Schirripa discusses a case in the Victorian Civil & Administrative Tribunal that highlights the importance of complying with maintenance timeframes in a commercial lease.

The case

The case – South Melbourne Pty Ltd v Red Pepper Property Group Pty Ltd (Building and Property) [2018] VCAT 1864 – concerned a landlord’s failure to repair a faulty air-conditioning unit.

The tenant operated a Pilates studio from retail premises in Melbourne. A special condition was inserted into the lease that required the landlord to install an air-conditioning unit in the studio (recommissioning the existing roof-mounted air-conditioning unit). It was agreed that the landlord would be responsible for installing the unit, and the tenant for ongoing maintenance and repairs.

During the first year of the lease, the air-conditioning unit experienced a number of issues. Ultimately, the fan needed to be replaced. Although the tenant advised the landlord of the issues, the landlord claimed that they were the tenant’s responsibility. The tenant subsequently sought to terminate the lease.

The decision

The Tribunal held that the tenant was entitled to terminate the lease as the landlord’s obligation to provide air-conditioning was a fundamental term. Because the landlord didn’t address the issues and repair the air-conditioning unit, this amounted to repudiation.  (Repudiation is the legal term that refers to the conduct of one party to a contract effectively renounces their obligations under the contract.)

The lesson

It’s unclear if the ACT Tribunal would have made the same finding. However, the case is as an important reminder to landlords to honour their maintenance obligations. This includes promptly attending to any issues. In this case, the Tribunal highlighted that the premise was without functional air-conditioning for two and half months. This was despite the tenant  repeatedly requesting that the landlord address the situation. These requests were ultimately ignored, which was detrimental to the tenant’s business and led to customers taking their business elsewhere.

How can we help you?

If you have a commercial or retail lease, our Business Law team can advise you about your obligations – whether you are a landlord or tenant. Please contact us on 02 6285 8000 or by email.