In a perfect world, both landlord and tenant follow the lease agreement to a T. In reality, this is not always the case. So what can you do when reality strikes?

What are the common causes of leasing disputes?

Both landlords and tenants can be guilty of starting a disagreement or dispute. It’s important to take leasing issues seriously. These are some of the common leasing disputes.

1. Security deposit

Paying the security deposit at the start of the lease usually goes over smoothly. As long as the landlord and tenant have agreed on the price, then all is good. The disagreements usually come at the end of the lease when the security deposit has to be returned to the tenant. There could be make-good provisions that apply, unpaid rent, etc. There are some nasty landlords out there that make it very difficult for tenants to recoup their security deposit. On the other hand, there are tenants that leave the property in a dilapidated state. It’s good to think about the security deposit at the start of the lease.

2. Rent

Tenant paid the rent after it was due? A landlord might let it slide the first time as long as the tardiness does not become a habit. If the tenant completely stops paying the rent while still occupying the property then that’s another problem by itself.

3. Undisclosed defects

A landlord’s failure to disclose to the tenant the defects on the property is a potential cause for dispute or actually fix capital expenditure items. Aside from affecting a tenant’s stay on the property, defects could have also influenced their decision to proceed with the transaction.

4. Property damages

Even the best of tenants cannot guarantee that a leased property will remain in the same condition as when it was occupied. Whether it’s fair wear and tear or actual property damage, a landlord and tenant could end up in a dispute about who is liable for the cost of the repairs.

5. Renewal of lease

Disputes can also occur during discussions of renewal of lease. Unless there was persistent breach or default, a tenant can exercise the option to renew the lease.  Rent adjustment is often the source of disagreement during lease renewals. Understandably, no tenant is particularly willing to pay more rent, causing friction between landlord and tenant.

6. Enforcement of lease terms

A properly drafted lease specifies the available remedies for a breach. The law is very specific on how a landlord or tenant can enforce its rights and how counterclaims can be made when legal procedures aren’t properly followed. 7. Taking possession of property When a tenant has not been complying with their lease obligations, the landlord can decide whether or not to take possession of the property. Depending on the given circumstances and the method of obtaining possession, taking possession might result in a serious conflict between the landlord and tenant.

What is the best course of action when involved in a leasing dispute?

It’s essential that the lease agreement and disclosure statement are as clear as day when it comes to breaches and remedies. Generally, poorly drafted lease documents create ambiguity and cannot protect your position either as a landlord or tenant.

Sit down and talk

Communication, communication, communication. When faced with a dispute, the simplest thing you can do is discuss the issue among yourselves. Don’t be sticking your head under the sand and think the issues will disappear. Speak to the other party and see if you can sort out the issues amongst yourselves. If you’re fortunate to settle the dispute this way, make sure to keep a written record of your agreement (i.e. deed of settlement and release).

Use standard notices or breach of duty notices

You can use standard notices or breach of duty notices to inform the party of the problem (i.e. notice of default). If the dispute is still unresolved after putting your complaints or requests in writing, then you might need to send a follow-up form or take the dispute to court.

Consider alternative dispute resolution (ADR)

There are instances where you will need intervening third parties who can present you with solutions and guide you through succeeding negotiations. Mediation and arbitration are common ADR processes. The Victorian Small Business Commission (VSBC) can help arrange low-cost mediation or ADR in the case of commercial and retail disputes.

Go to court

If ADR failed to resolve the dispute, the VSBC can refer you to the Victorian Civil and Administrative Tribunal (VCAT). Either landlord or tenant can file an application to VCAT and pay a filing fee.

Talk to a leasing dispute lawyer

Lease disputes can be expensive and time-consuming, whether you’re a landlord or tenant. TNS Lawyers can help you identify the root cause of the dispute and the available resolution to help you settle amicably. Our property and leasing lawyers represent both landlords and tenants in all aspects affecting industrial, retail, and commercial leases. In cases where reaching a settlement is out of the question, we can appear and represent you in court. Call us at 03 9052 3214 or send your enquiry through the form below.

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Vincent Tang of TNS Lawyers