Commercial lease terms are not just boxes to tick, they’re business critical. When a landlord fails to uphold their end of the deal, you don’t have to simply accept the consequences. This matter is a great example of how timely legal intervention can shift the outcome in a tenant’s Favour.
Bruce Pasetti | Practice Leader
The Problem | A cool promise not delivered
Our client signed a lease that included a clear term – the landlord would install a split system air-conditioning unit. The client agreed to contribute up to $5000 for the installation, which would be offset against a rent-free period.
However, things didn’t go as planned.
Due to building restrictions, the landlord was unable to install the agreed-upon air-conditioning system. this caused substantial delays to the client’s office Fit out, staff hiring and commencement of operations. Leading to a loss of valuable business opportunities.
Understandably, the client was frustrated. Without adequate cooling, the office couldn’t function and the delay in operations was starting to bite. They were prepared to walk away from the lease if a solution couldn’t be found
Our Response | Strategy, Law & Lease Negotiations
We stepped in to assess the situation. In our view, the landlord’s failure to install the split system air conditioner wasn’t just an inconvenience, it was a material breach of the lease. It also raised potential issues under the Australian consumer Law, including possible misleading or deceptive conduct.
We drafted a detailed letter to the landlord’s solicitor outlining the impact of the breach and flagged our client’s intention to terminate the lease if a satisfactory solution could not be reached. but we didn’t stop there. We proposed a range of options to resolve the dispute, Including:
- An extended rent-free period
- A delayed lease commencement date
- Or for the landlord to cover the cost of an alternative air-conditioning system.
Over the following weeks, we entered into negotiations. The landlord was initially resistant, keen to hold our client to the original terms. But our client stood firm, no resolution, no release.
The Resolution | Cool heads prevail
After sustained negotiations, we secured a successful outcome. The landlord agreed to install a superior ducted air-conditioning system, at a significant cost of $18,000. Our client contributed only their originally agreed $5000.
We also negotiated to push back the lease commencement date until after the new system was installed, with the rent-free period adjusted to match.
Or client was pleased with the outcome and is now operating successfully from the premises with a state-of-the-art ducted air-conditioning system that more the meets their needs.
More helpful sources
Stratos Legal | Property and Conveyance Law | Stratos Legal
QLD Small Business Commissioner | Tips when entering a commercial lease – Queensland Small Business Commissioner
