An agreement between the lessee and the lessor, to occupy a residential premise for an agreed rental payment is called a lease or residential tenancy agreement. It is made up of two parts. It is a legal document where the first part sets out, both the lessee’s and the lessor’s rights and responsibilities. Signing the lease means that you agree to abide by its terms and conditions and therefore you should read it very carefully before signing it. The second part of the lease is the condition report.

There are two types of tenancy agreements – fixed-term and periodic. A fixed-term agreement is for a set period of time, whereas a periodic agreement goes from week to week or month to month.

Legislation regarding Lease

All states have different Residential Tenancy Laws that govern the terms, under which you can lease your property to a residential lessee. These pieces of legislation ensure fair dealings and have their own requirements regarding:

  • Standard Clauses;
  • Lessor/lessee relations; or
  • Provision for a Tribunal to oversee any dispute.

The legislations governed in different States are:

  • Australian Capital Territory – Residential Tenancies Act 1997;
  • New South Wales – Residential Tenancies Act 2010;
  • Northern Territory – Residential Tenancies Act 1999;
  • Queensland – Residential Tenancies and Rooming Accommodation Act 2008;
  • South Australia – Residential Tenancies Act 1995;
  • Tasmania – Residential Tenancy Act 1997;
  • Victoria – Residential Tenancies Act 1997; and
  • Western Australia – Residential Tenancies Act 1987.

However, residential leases are broadly similar in between the different States and Territories.

Conditions to Consider

Before signing a lease, the lessor and the lessee should consider certain things:

Contract for Residential Lease

An agreement to lease must include:

  • A lessor can ask a prospective lessee to pay a holding fee of up to 1 week’s rent;
  • A holding fee can only be requested from a prospective lessee after the tenancy application has been approved;
  • the acceptance of a holding fee means, the lessor must keep the premises for the prospective lessee for at least 7 days.

The property must not be offered to anyone else, during this time;

If the prospective lessee decides not to go ahead with the tenancy, then he/she will lose the full amount of the holding fee and not just a portion of it;

Once a holding fee has been accepted, the lessor is committed to enter into a lease with the lessee. If for whatever reason the lessor abstains from it, then the prospective lessee can apply to the Tribunal for the matter to be resolved; and

Before the lessee signs a lease at the start of a tenancy, the lessor or the agent must disclose certain things. These include:

If a sale contract has been prepared for the property;

If a financial institution has commenced the Court action to take the possession of the premises; and

Certain material facts about the premises.

The name and address of the lessor and lessee;

The dates indicating when the agreement starts and ends (duration of lease);

Details about how the lessee should pay the rent and how much rent is to be paid;

Acceptable standards of behaviour by lessee;

Notice given by the lessor or lessee before vacating the premise;

Provisions regarding subletting;

Governing law;

Provisions regarding maintenance and repairs; or

Any special term agreed upon, by the lessor or lessee which is in accordance with the respective State Act.

If the lessor or lessee breaches the State’s or Territory’s Residential Tenancy Act, he/she will be fined by the local Tribunal set up in accordance with the local legislation.

A material fact is the information about the premises that is relevant to the lessee’s decision, as to whether or not they want to live in the property. For example, if it has any significant health or safety risks, or if a serious flood, bushfire or violent crime has occurred in the premises in the last 5 years.

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