Lawyers Perth | Why There is a Commercial Tenancy Act
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Why There is a Commercial Tenancy Act

Why There is a Commercial Tenancy Act

Most business dealings have rules and regulations that must be adhered to, to ensure fair and honest dealings from all concerned. The Commercial Tenancy Act is no different in this regard. Without the act, both landlords and tenants can be at risk of dishonest or unfair treatment that costs them in terms of finance or limitations to their business that can make continuing very difficult and the success they expected almost impossible.

But just because your potential landlord presents you with a professional looking lease to sign doesn’t mean it should be signed without having your own lawyer examine it carefully, because clauses can easily be inserted that look fine to the inexperienced business owner, but in fact, mean they will be paying more than they need to. Or it could mean there is something else in the lease that will cause you difficulty in the future, such as limiting the ways in which your business might expand.

When you lease premises to conduct business there are many ways in which the lease can work against you, in spite of the Commercial Tenancy Act.

The Purpose of the Act

The Act has a specific purpose and that is to make sure both parties are treated fairly. It does this in several ways: –

  • The Act requires the landlord to supply to the prospective tenant, a disclosure statement, tenant guide, the lease and an operating expensed budget at least 7 days before the lease must be signed.
  • It establishes a rent review process that is fair and consistent
  • When it comes to payment of turnover or percentage rent it includes special requirements.
  • It regulates the distribution to tenants of landlord operating expenses.
  • It ensures a minimum lease period of 5 years for most tenants.
  • It allows for certain lease provisions to be void – especially those requiring the tenant to be open during specified periods.
  • It ensures that landlords must give their tenants a specific date from which the option to renew their lease is no longer exercisable.
  • It prevents landlords passing on their legal fees to tenants.

In addition, under the terms of the Act both landlords and tenants can approach the Small Business Commissioner for assistance in resolving any disputes that may arise. If the matter is urgent, they may go to the State Administrative Tribunal (SAT).

So even though you might think there are far too many rules and regulations for your business, many of them work in your favour to help you succeed in your business endeavour. They ensure things are also fair for landlord, without whom you would not be able to lease premises from which to run your business.