Be Aware of Your Obligation to Maintain and Repair!

AN OFTEN contentious issue in Retail tenancies: Who has the responsibility for maintenance and repair to the leased premises?

Is it the landlord? Or, as many landlords believe … the tenant?

Disputes relating to maintenance and repairs are the third most common type of dispute referred to the Small Business Commission in the past twelve months — highlighting the importance of landlord’s awareness of their obligations.

The common law position in Victoria provides that a landlord is not obliged to repair leased premises. Accordingly it is legislation, such as the Retail Leases Act 2003 (Vic) (RLA), that provides the regulatory regime governing landlord’s obligations for maintenance and repairs under Retail premises leases.

Under the RLA, the landlord of Retail premises is responsible to maintain the structure and fixtures in the Retail premises in a condition consistent to that of the premises when the Retail premises lease was entered into.

How far does the Responsibility extend?

This responsibility extends to plant and equipment at the Retail premises; and appliances, fittings and fixtures provided under the lease by the landlord relating to the gas, electricity, water, drainage and other utilities.

Landlords should be wary that their responsibility only extends to maintain the premises in a condition ‘consistent’ with the condition of the premises at the date the lease was entered into. In the context of a renewed lease, the relevant date is the commencement date of the further term; and NOT when they first entered into the lease.

Are there any Safeguards?

Ensuring that condition reports are obtained at the commencement of each renewed term would be a method for landlords to monitor the extent of their obligation under the lease.

Another important distinction is that landlords are only responsible to repair the premises, not improve them.

Where the tenant has arranged for urgent repairs to be carried out to the premises, the landlord must reimburse all reasonable costs (provided the tenant gave notice to the landlord within 14 days of the repair, and specified the nature and costs of the repair).

Landlords should also be aware that there are certain exceptions to their obligation to repair and maintain, namely:

  • where the need for repair is a result of the tenant’s misuse of the premises; and
  • where the tenant is entitled (or required) to remove the property at the end of the lease.

Failure by landlords to fully comply with their obligations under the legislation may lead to repudiatory conduct; and allow the tenant to terminate the lease and recover damages.

Bottom Line: All Retail landlords need to be diligent in understanding and upholding their maintenance and repair obligations, under any Retail leases.


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