Commercial Property Blog

Legal Tips and Traps

The top five mistakes landlords make!

Posted by Ricky Raad on 6 Jun 2016

It doesn’t matter if you’re the landlord of an industrial, retail or residential property – your objective is the same - to find a good property and an equally well-suited tenant. Here are the top five mistakes that landlords make in achieving these goals:

1.    Failing to research and conduct proper searches on a prospective tenant

It’s all too common to come across landlords who have been so eager to get a tenant into their premises that they have let the excitement and thrill of receiving rent cloud their judgement as to whether the tenant is actually the right fit. Before deciding to take on a tenant, your lawyer should undertake the necessary bankruptcy and asset searches so you can make sure that the tenant is financially viable.

2.    Failing to rectify structural damage to the premises

Another common mistake we encounter is landlords operating under the misguided belief that once they have leased their premises, they aren’t responsible for any repairs or maintenance. Landlords must be aware (and this is subject to the terms of the Lease) that you will, more often than not, be obligated to repair any structural damage to the premises – that is, damage affecting the framework or load bearing capacity of the building.

3.    Trusting a handshake deal

If we could give one piece of advice to every landlord today, it would be, without a doubt, to write everything down! Once upon a time handshake deals were airtight and basically guaranteed each party’s performance. Unfortunately, this time is long gone and as a consequence, you need to cover yourself. Communicate via email or letter, and if you make a phone call or have a meeting, make sure you outline the details in an email. Establishing a paper trail will assist you in avoiding problems down the track.

4.    'If it’s outside the Lease, I can’t help you'

Progress is impossible without change. We operate in a dynamic market and if the past year has been any indication of what to expect in the Australian property market then Landlords must be willing to adapt and cater (reasonably) to the needs of their tenants. The provisions of a Lease aren’t set in stone - if a Landlord is open to the idea of amending certain provisions, then this can be done through a variety of means, one of which is a Variation of Lease Deed. The ability of a Landlord to respond to their tenant’s concerns is fundamental in building a relationship of trust, longevity and loyalty. 

5.    Enforcing the Terms of the Lease

This may seem to contradict point 4 but there is a reason for including it. We often act for Landlords who have let their tenant’s actions ‘slide’ or who have swept them under the rug - despite there being a clear breach of the provisions of the Lease. As a Landlord, whilst you may think that this builds rapport with your tenant (note - in some circumstances it may), there are ramifications for ‘nice’ Landlords who have repeatedly let their tenant breach terms of the Lease (including the date of payment of rent, not allowing pets in the premises and ensuring the premises is kept reasonably clean). The effect of this has been that when the Landlord needs to make a claim, as per the rights under the Lease, the tenant responds with “Well, you were aware of this months ago and did nothing to rectify the situation” or “This is the first time I am hearing about this being an issue;” leaving you without much of a legal leg to stand on. 

These five mistakes are easily avoidable – it’s a case of doing your research and then once you have the tenant in place, making sure you continue to dot your i’s and cross your t’s.

If you have any questions about your role as a landlord and how you can avoid making these mistakes – or you’ve made one and would like some assistance, please contact: