Case Study: Negotiating Refunds and Lease Folding for Industrial Property Tenant

The Problem

‍When our client found their ideal industrial space that met their specialist requirements, they were eager to get things up and running and kick off their new business. They went ahead and signed an eight-year lease and were fully committed for the long haul. However, they instead found themselves tangled in a mess created by a landlord who wasn’t properly equipped with the knowledge of how to manage a commercial property. Their first run of problems started on move-in day. When they arrived, the front door of the building was unlocked, there was significant leakage coming from the roof, and the floor was covered in water. When inspecting the property, they also noticed the landlord had left some of their belongings, and the property wasn’t properly equipped with the type of power their business needed. Despite having paid their first month’s rent, these conditions meant our client had to push back their move-in date. When our client got in touch with the landlord, they were promised it would be sorted. Unfortunately, when the tenant returned to the property, all they found was a bucket placed under the leak. The tenant also noted that the landlord had entered the property without their consent, a clear violation of basic rights of a commercial property tenant. No longer being able to delay their operations, the tenant paid for the repairs themselves with the promise from the landlord that they would refund them. However, this payment never came. At this point, the tenant lost faith that this was a safe environment to conduct business, and they lost faith that the landlord was going to honour the rights under of the lease.

‍Our Involvement

‍The tenant reached out to us seeking our help in getting them out of the premises and out of their lease. We got in touch with the landlord and communicated that the conditions were not acceptable, and we were seeking the lease to be folded. Luckily, in this initial discussion, the landlord agreed that it was best not to continue this tenancy. However, we requested a meeting with him and the agent listed on the lease to go over the finer details. When we sat down with them, it was brought to our attention that the agent, while listed on the lease, was only a mate and didn’t have anything to do with the tenancy. He worked for another property management firm and had allowed the landlord in this case to copy one of his deed of leases. Unfortunately, the landlord left the agent’s name on the lease, so while he didn’t actually have anything to do with the agreement, he was liable for all of the landlord’s misgivings.

‍The Outcome

‍In a matter of weeks, we were able to get our client out of their lease and get them a full refund of over $8k. With our support and negotiations, we were also able to save them the cost of having to use a lawyer and to not have to continue with the lease they originally signed for a further 8 years. While we are happy to have used our expertise to help this particular business, we strongly urge both tenants and landlords to fully understand the property management industry and the roles and responsibilities that both a tenant and landlord need to uphold before entering into an agreement. Otherwise, get in touch with someone on our team to help.