By Phillip Leaman

3 July 2018

When the economy gets weaker tenants start to default in the payment of rent and outgoings. Landlords are left with the burden of receiving little or no income and have to chase up rent on a continual basis.

So what are the tips to get paid?

  • Make sure your lease is valid. Has there been a renewal since the lease was entered into and has that renewal been documented and signed by all parties including any guarantor?
  • Have you ensured that you have the correct security deposit? Some leases provide that the security deposit is based on a number of months rent. As the rent increases each year, so should the security deposit.
  • If the lease has expired and you are agreeing to a new lease (rather than a renewal of options) have you rechecked the financial status of the tenant and guarantors and ascertained whether the guarantees and security deposit is still sufficient?
  • Get a bank guarantee instead of a cash security deposit. If you have a security deposit make sure you register a security interest to avoid a liquidator taking it off you.
  • Make sure you act on defaults and issue a formal notice of default prepared by a solicitor.
  • Don’t let a default in payment of rent run beyond a month. The longer you leave it the less security deposit you will have.
  • Make sure you comply with the Retail Leases Act if the lease is a retail premises lease.

Case Study

We had a client who had a lease prepared by an agent. The lease had last minute amendments made to it and a special condition was included to provide that outgoings were payable by the tenant. Substantial arrears of outgoings were payable. The tenant went into liquidation and the landlord pursued the guarantor.

Unfortunately for the landlord, the amendment which was hand written on the lease was not initialled by the guarantor. This meant that the guarantor had not agreed to the guarantee the obligation to pay outgoings and the landlord lost out. It is important that all amendments are signed off by all parties to avoid a dispute later than some or all of the lease is enforceable.

It is important that a lease is prepared by an experienced property lawyer to avoid you having problems recovering rent if a tenant defaults.


Contact Phillip Leaman or a member of our Property Team to discuss your leasing requirements or for assistance with bad paying tenants.

Related Articles

View All
Information Technology & Innovation / Developments / Business Law

Cyber Security and Protection from Cyber Fraud

Email communication is an inherent part of modern day business It is not uncommon to run an entire transaction online,...
Read More
Property & Development / Developments

Co-ownership of property, what could go wrong?

This can be a very exciting time and you can easily get caught up in the celebrations of settlement without a second...
Read More
Business Law / Property & Development / International Investors

Self Managed Superannuation Funds and Property Investment Part 2: Stamp Duty when Transferring Property Assets

Whether the SMSF has purchased this property outright or though the assistance of a Limited Recourse Borrowing...
Read More
Business Law / Property & Development / International Investors

Self-Managed Superannuation Funds and Property Investment Part 1: Using Borrowed Funds for Real Property Investment

There are potentially numerous benefits for purchasing property via a SMSF including asset protection and concessional...
Read More
Property & Development / Developments

PEXA electronic conveyancing in, paper-based settlements out from 1 October 2018.

As of 1 October 2018, paper-based settlements are no more and almost all property transactions in Victoria must be...
Read More
Business Law / Construction / Employment Law

September 2018 Newsletter

September 2018 Newsletter See the full newsletter here Welcome TLFC Law are pleased to welcome Min Seetoh to the...
Read More
Property & Development / Real Estate Agents

Unprofessional estate agents need not read this.

Apart from re-arranging some sections, estate agents have additional obligations of professional conduct They include:...
Read More
Property & Development / Litigation & Dispute Resolution

Subpoenas: think twice before pushing the button

In a recent decision of the Supreme Court of Victoria, Brady Queen Pty Ltd and 280 Queen Street Pty Ltd & Anor (No...
Read More
Business Law / Property & Development / Developments

Tisher Liner FC Law finalists in the Australian Law Awards 2018

The 18th annual Australian Law Awards, in partnership with UNSW Law, recognises the outstanding contribution of...
Read More
Litigation & Dispute Resolution / Property & Development / Developments

Rules of Thumb for Purchasing a Property

Good advice is only going to benefit you if you take advantage of it This applies whatever your purpose for the...
Read More
Real Estate Agents / Property & Development

ESTATE AGENT UPDATE – Agents breathe a sigh of relief

A recent case in the Victorian Court of Appeal in Advisory Services Pty Ltd v Augustin held that certain rebate...
Read More