Mason Sier Turnbull and how leases can impact on franchises

The faith that Victoria’s property agents and landlords place in the standard form commercial and retail leases prepared by industry and other bodies is dangerously misplaced, according to Melbourne property lawyer Mark Kemp.

Kemp, a senior associate with law firm Mason Sier Turnbull , says such documentation contains numerous deficiencies, particularly in relation to outgoings, car parking, essential safety measures, occupational health and safety, relocation and demolition.

“Aside from specific deficiencies, the issues and legislation affecting leases are constantly changing, thereby making standard form leases risky unless they are reviewed and updated regularly,” he says.

“No agent or landlord should use a standard form lease without finding out if it requires modification, and there are some types of leases for which such forms should never be used. Multi-tenanted buildings and industrial premises, for example, raise leasing issues that are not covered by standard form leases.”

Kemp warns that agents and landlords who pull standard form leases off their shelves for any and every new lease risk undermining their positions and exposing themselves to litigation. He maintains that standard forms often prevent landlords from recovering all or particular items of outgoings, thereby causing a substantial reduction in the landlord’s rental yield. He cites car parking as a constant source of disputes that could be avoided by using tailor-made and up-to-date leases.

“The industry has become too dependent on standard form leases,” he says. “Instead of using standard forms, agents and landlords should be producing their own and reviewing them annually.”

Kemp’s warning comes hard-on-the-heels of Victoria’s new Occupational Health and Safety Act and the Building Interim Regulations, both of which affect landlord/tenant responsibilities and increase the costs of leasing. It also follows news that Victoria’s Retail Leases Act is in the process of being amended after only two years of operation.

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