Redevelopment and Redecoration Clauses – As a Tenant, What do I have to do?
REDEVELOPMENT AND REDECORATION CLAUSES – AS A TENANT, WHAT DO I HAVE TO DO?
Many Tenants are concerned when they read a Lease and it contains a Redevelopment or Redecoration clause, or in most cases, both. This article aims to explain these clauses and their effects on a prospective Tenant of a leased premises.
Redecoration clauses are a common occurrence in many Leases. However, these can still appear to be quite concerning to Tenants, particularly if these individuals have not previously entered a Lease. In short, a redecoration clause requires Tenants to update the premises within a specified time frame, which is outlined within the relevant clause in the Lease. In general, these updates require the Tenant to:
Clean the inside surfaces of the Premises;
Paint all surfaces inside the Premises in the same way that those surfaces were painted at the Commencement of the Lease; and
Replace floor coverings, curtains, blinds and other furnishings and decorations which are reasonably, worn or damaged beyond fair wear and tear.
It is important that any prospective Tenant understand that these requirements are mandatory and form part of the Lease. Should these not be complied with, the Tenant could be in breach of the Lease. Therefore, it is prudent that a Tenant read their Lease thoroughly to see whether they are required to update the premises, by what means, and within what timeframe.
Many Retail Leases include demolition or redevelopment clauses. In general, such a clause will allow the Landlord to demolish the leased premises to carry out works such as repairs or redevelopment.
Should a Landlord wish to exercise its rights under a demolition or redevelopment clause, they must ensure they comply with the relevant legislation, which, in Victoria, is the Retail Leases Act 2003 (Vic). Under the legislation, the Tenant is protected from any wrongdoing by the Landlord.
In summary, under the act, a Landlord must not terminate the lease for the purposes of demolition or redevelopment unless they have:
Provided the Tenant with a genuine proposal to demolish and/or develop the building; and
Give the Tenant at least 6 months’ written notice of the termination date.
Should the Landlord comply with the above, the Tenant may terminate the lease before the termination date by giving the Landlord 7 days’ written notice.
This article is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this article without first obtaining specific professional advice.
DISCLAIMER: We accept no responsibility for any action taken after reading this article. It is intended as a guide only and is not a substitute for the expert legal advice you can get from De Marco Lawyers and other relevant experts.