In brief
You may recall that in last September, I referred to the VCAT decision in Verraty Pty Ltd v Richmond Football Club Ltd. In that decision, it was determined that if a landlord does not provide a tenant with an estimate of outgoings each year, the tenant is not required to pay outgoings. This has now been confirmed in the Supreme Court appeal of that decision.
What you need to know
Property managers need to ensure that a tenant under the Act is given an estimate of the outgoings in accordance with the Act. This means that an estimate needs to be given before the lease is entered into and annually before the commencement of each year of the term of the lease.
Background
The relevant background to the decision has been discussed previously but the Supreme Court usefully stated the following:
I reject Verraty's submission that even when the estimate is given late, the tenant remains liable to pay outgoings that relate to the period before the estimate is given. Such an interpretation makes the consequences of a landlord not giving a notice meaningless.
The Supreme Court approved of VCAT's decision on this aspect of the matter.
Conclusion
Property managers must ensure that if the lease is governed by the Act, an estimate of the outgoings should be given to the tenant prior to the tenant entering the lease and then annually, before the commencement of each annual period. Outgoings cannot be recovered from a tenant if the notice has not been given.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.
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